Owning a home is something that many of us aspire too. Don’t get me wrong, there’s nothing wrong with renting if that’s what you prefer, but if you can afford to buy your own home then it’s often the better option. Once you’ve paid your mortgage off, your home is yours and you won’t have to pay rent or a mortgage once you retire which can often make retirement really difficult. But buying a house and getting a mortgage needs some careful planning before you take the plunge.
Buying our own home is something we have dreamed about doing for years now, and we are almost in the position to be able to do it. Because I am so determined to finally get on the property ladder, I’ve been doing lots of research into mortgages and the best way to go about being approved. It’s not as simple as just ringing up a mortgage provider and asking them for a loan. There’s a lot more to it than that. You need to give yourself the best chance of being approved and getting the best interest rates you can too. There are lots of things to think about when applying for a mortgage.
Consider using a mortgage broker
Mortgage brokers are the best people to get mortgage advice from. They know the market inside out and they will be able to help to match your unique circumstances to a mortgage that you are likely to be accepted for.
If you go it alone and apply for a mortgage without specialist advice, then you risk being rejected and having to start the whole process again. Not only will this delay your home purchase, but it will also leave a hard search on your credit file. Multiple hard searches in a short space of time will make it harder for you to be accepted for a mortgage, so it’s always best to go through a broker to get the right advice first time.
Be realistic about what you can afford
We all have grand dreams of buying expensive, luxurious houses, but dreams is usually all they should be. No matter how much you’d like to be able to afford that house that’s just gone up for £500,000, if you can’t afford it, then you need to accept that and move on.
Having spoken to a couple of mortgage brokers and finding out what interest rates we would be likely to be offered, I’ve been making use of mortgage calculators to see what our monthly repayments would likely be based on a house at the top end of our budget.
This isn’t our exact figures, but it shows you how a calculator can really help you to work out whether you really can afford to go to a certain figure – would you be able to afford to pay the monthly amount comfortably?
Make sure your paperwork is in order
You are likely to be asked for all kinds of paperwork during a mortgage application, so it’s a good idea to get organised well in advance. You are likely to need:
- Three to six months of payslips
- At least two years of accounts if self-employed
- Employer contracts (not every provider asks for this)
- Proof of ID
- Proof of address
- Bank statements
- Utility bills
Avoid applying for credit in the run up to a mortgage application
Every time you apply for any kind of credit, be it a credit card, loan or mortgage, it will leave a mark on your credit record. Mortgage providers use credit records to make sure that you are good at managing money and that you don’t have a history of missing payments or defaulting on loans.
Avoid taking out new lines of credit if you can in the run up to applying for a mortgage as this will give you a better chance of being approved for a mortgage.
Cut back on your spending
Mortgage providers will want to see that you are good at managing your money and that you can afford the new monthly payment. They will want to see bank statements to see how you spend your money and how much money you have spare at the end of each month. If they don’t think you can afford the repayments, or it would stretch your finances, then they won’t offer you a mortgage! It’s a good idea to spend the six months running up to applying making cutbacks so that your bank statements look nice and healthy.
If you’re dreaming of owning your own home, and you’re preparing to apply for a mortgage, then these steps will help to give you the very best chance of success.