How to Prepare for Getting a Mortgage

Many of us will take out a mortgage so that we can buy our own home. This can be a very satisfying thing to be able to do and it can give us security with regards to knowing that we will always have somewhere to live. However, it is not easy to secure a mortgage and so it is worth making sure that you prepare well so that when you do apply, you have everything that you need in place.

Good credit record

It is really important to make sure that you have a good credit record. It can be difficult to know whether yours is good enough as different lenders have different criteria that they judge you on. However find a free place to get access to your credit record and then check it and make sure it is correct. Some people get a poor credit rating because they have items on their record which are incorrect, such as loans still listed that they have paid off. See if there is anything outstanding that might be making it look bad that you might be able to rectify. It does not take long to do these checks but it could make a big difference to your chances of getting a mortgage application accepted.

Deposit saved up

You will normally need a deposit in order to secure a mortgage. This tends to be between 5 and 10% of the value of the home you are buying with the mortgage. This is a significant sum of money and therefore you will need a lot of time to save it up. It is worth getting into the habit of regularly saving as soon as you decide that you would like to buy your own home. Setting up a direct debit so that money is paid into a savings account each month as soon as you get paid can be a really godo way of making sure that you do save each month. The more that you put aside towards the deposit the better. This is because you will be able to put more towards the cost of buying the home and will not have to borrow so much. This will keep the cost of your mortgage down and could even mean that you will be able to repay it all more quickly. It will also reduce the risk that you will get into trouble making the repayments.

Sensible house choice

It is worth thinking carefully about the property you propose to buy. Obviously you will have certain requirements yourself, but you also need to think about it from the point of view of a lender. They will want to make sure that the property gains in value or at least holds it value. They will want something that is in a good state of repair and in an area where it is likely to stay that way.

The value of the house is also important. You will only be able to borrow up to a certain amount of money based on your salary. This means that you will be restricted in what you can buy and therefore need to choose something which falls within that budget.

Easily covering your bills

The lender will also look at how well you are managing each month. They will want to be sure that you will have enough money available to cover their mortgage repayments. Therefore you need to demonstrate this and they will ask to look at recent bank statements to see how you are doing. The best thing to therefore do is to make sure that you spend sensibly and have some money left at the end of each month for a good few months. This will allow you to have some statements to show to the mortgage company to prove that you are capable of covering repayments. It will also have the additional benefit of leaving you some spare money to be able to put towards your deposit.

All of these behaviours combined should be enough to show the lender that you will be capable of coping with a mortgage. Lenders are getting more wary these days and want to try to ensure that as many borrowers as possible will repay their debts in full and so will be looking for lots of clues to show them that you fit this criteria. The more that you can do, the more likely you are to be able to secure that mortgage and get a good mortgage deal. Better deals tend to be offered to those customers that have a better credit record and are seen as less risky you see. They will also be useful for you because they will enable you to get into good habits ready for when you need to cope with making your mortgage repayments each month. You may even get so good that you can start to make overpayments and pay the mortgage off early.

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