Taking out a mortgage is one of the biggest financial steps you can take. As a first time buyer, you’ve been through a lot to get to this stage. You’ve saved up enough money for a deposit, you’ve spent months searching for the perfect house, and you’ve finally learned the difference between repayment and interest-only mortgages. The last thing you want is for your application to fall through at the last moment and have your dream home snatched away from you.
Whether or not your mortgage application is approved is ultimately up to the lender. But there are several steps you can take to improve your chances of being accepted.
Work out how much you can afford
Before you even begin the house-hunting process, you should have a good idea of your price range. You don’t want to end up making an unrealistic offer that gets rejected by the lender. When deciding to approve or reject your application, the lender will take into account such factors as your current income and outgoings. If you’re not in a hurry, it can be worth taking a little extra time to save money or wait until you’re more financially stable.
This also applies to making an offer on a house. When you’re up against a competitor for your dream home, it might be tempting to make a high offer that you can’t afford. Always be realistic and stay within your price range.
Take a look at your credit score
Before approving your mortgage, a lender will need to know how trustworthy you are. They will do this by checking your credit history. Most people don’t even think about their credit scores until the time comes to apply for a loan. Even if you’re not thinking about buying a house yet, it would be wise to take action to improve your credit score as early as you can.
Your credit score is influenced by a vast range of factors, including your monthly credit card activity and bill repayments. There are lots of ways to find out your score in advance. This will allow you to identify any red flags and work to improve your credit rating before buying.
Pay a larger down payment
The more money you can save towards a deposit, the more options you will have when it comes to choosing a mortgage. A larger down payment shows you can put your money where your mouth is and can translate to lower monthly payments, better interest rates, or a shorter overall mortgage term. By creating a budget and being smart with their spending, there are plenty of ways first-time buyers can save enough money for a hefty down payment.
As a first-time buyer, securing a mortgage can be daunting. If you’re struggling to find the best mortgage deal or don’t know enough about mortgages to find the right solution, you might benefit from seeking advice. A mortgage broker such as Altrua Financial will help you understand the market and choose the best mortgage with the lowest rates.