Moving into your first home is a huge milestone. The shopping, design, and planning that come with it make it more exciting. That said, you also need to deal with technical aspects, like the mortgage application process. The size of the mortgage that people need increases because of the rising house prices nowadays. Hence, it becomes harder for them to secure a home loan. The following tips will increase your chance of getting a home loan:
Set a budget
The first thing you have to do before applying for a mortgage is to review and reassess your finances. This way, you’ll have an overview of your financial status. Mortgage lenders will examine your income, credit history, and expenses to determine if you can repay your loan. Planning will give you a clearer image of what will happen in the future. Take note of your combined income, essential and non-essential expenses, debts, and savings, and you will know how much money you can pay for a mortgage each month.
Save for a bigger deposit
The market is saturated with promises of a 95 per cent mortgage. However, there are very few houses that are available with such a small deposit. This is why many first-time buyers are struggling to close deals. If you can save a deposit of at least 15 per cent of the property’s value, then you will have more choices. Additionally, depositing a large amount means you have to borrow less money and pay less monthly interest. This will help you in the long run.
Review your credit score
A higher credit score usually means you have a higher chance of being granted a mortgage, while a lower credit score reduces your chances. So before applying, check your credit score. Lenders use your credit score to determine if you have a good track record of paying your debts. If you have a poor credit history, you can take your time and fix it. If you do not have a credit card, it is time to get one but remember to use it with caution.
Assess your options
Before settling with a lender, go around and compare and review your options. In this case, a mortgage adviser can help you choose the most suitable lenders. It is better to hire a broker near your place for accessibility. If you live in the area, you can try searching for mortgage broker Kent to get started.
Try and try
Prepare yourself for rejections. If you are rejected, try to ask why your application was turned down so you can work on that aspect. It’s usually best to wait at least three months before submitting another application. Since too many loan applications can reflect on you, lenders will assume that you are struggling financially, which could negatively influence your credit score.
Buying your first home can be challenging but rewarding. There is more to learn about a home mortgage, but following these tips can help you get started.