If you’re considering getting a mortgage, you should know the factors that will affect your eligibility. This includes your credit score, how long you have been employed, your current debt, your employment status, and the size of the deposit.
Here are some top tips on saving for your first mortgage.
- Your Credit Score is Important
Before you apply for the mortgage, be sure to get a copy of your credit report held by credit reference agencies like Equifax and Experian. That shows you what lenders see when reviewing an application.
If you don’t have such a great credit score, then there are some things you can do that give you a good boost. Check you are on the electoral roll and close the credit accounts you aren’t using.
- Your Funding Forms the Starting Point
Think about your budget and work it out before you apply for your mortgage. You need to ensure you are able to borrow enough to cover the purchase of the property and you have enough money spare to cover extra costs and fees. How much you need to repay depends on the length and size of the mortgage, as well as the interest rate.
- Don’t Change Jobs
Lenders prefer it if you’ve had the same job for a long time, so if you’re considering a change of job, wait until after you have secured your mortgage. It’s generally good to have been in your current job for least three to six months before applying for a mortgage. The more money you can put down for a deposit, the more choices you have when applying.
- Debts Damage your Chances
When submitting your application, the last thing a lender wants to see is that you have a lot of money owed in loans and credit cards. Try to reduce your debt as much as possible before applying for a mortgage. That helps to demonstrate you are able to effectively manage money, and will make an application more likely to be accepted. It also means you may be able to borrow more from a lender than you thought.
- You Need Proof of Income
Mortgage lenders are going to want to see proof of income. You’re going to want a P60 form which you receive every year from an employer that shows a summary of your pay and the amount of tax deducted. You are also likely going to be asked for three months’ of bank statements and payslips to show a lender how much you are currently earning and spending.
- Having a Big Deposit is Best
The more money that you are able to save up for a deposit, the more mortgages you are going to have access to. Lenders will reserve their very best rates for people that have big deposits to offer. That way you can also benefit from making lower monthly payments because you’ve got a better deal to play with.
- It can be Easier to Buy with Someone Else
If you can’t come up with a good deposit for a mortgage by yourself, then you can consider buying a mortgage with someone else. That could increase your chances of getting a better mortgage, especially if the other person has a great credit history and has a higher income than you do. Keep in mind that this is certainly a big commitment though. You have to sit down and discuss what is going to happen if one of you planned on moving or selling their stake in the property.
- Don’t Chop and Change the Application
After you begin your mortgage application, you shouldn’t mess around with it and change the figures on there as it may interfere with the property purchase. Changing the information on the form means having to get reassessed. That might not be much of a problem, but it could cause a delay.
Don’t be Afraid to Get Help if You Need It
If you are having trouble with finding a good mortgage deal, or you aren’t sure how much you can reasonably borrow, you may wish to employ the services of a mortgage broker. They can research the market for you and take you through the application process to eliminate the guesswork. The right help can make all the difference when securing a mortgage and buying a home.