You have finally made up your mind and decided to take a step onto the property ladder. It is indeed exciting, but can be nerve-wracking, too, especially when you’re doing it for the first time. It’s sort of hard to know what to expect, and learning how it works can be a challenge. However, first-time home buying is not as ominous as it sounds if you have prepared yourself well for it.
To make sure you will go through it with the least amount of stress as possible, take these five tips with you and consider them carefully.
- Your Credit Score Matters
The most important thing, especially when you’re applying for a mortgage is your credit rating. You are not very likely to qualify for a mortgage if your credit score isn’t good. You might want to check the credit bureau’s website or phone them to get a credit report. Check your credit report if there are mistakes, unpaid obligations or accounts in arrears.
You should also know that because you pay everything on time does not mean your credit report will be flawless. What you borrow against your credit limit matters in terms of assessing your eligibility for a loan, especially a mortgage.
If your credit score is not so good at this moment, it’s going to take a while, likely years, to build it up. You might want to start at least six month before looking for a house to buy.
- How Much You Have vs How Much You Owe
Even if you you don’t owe as much in debt (from individuals and organisations alike), your might want to check your spending pattern to see how much you’re saving at a given period. As a first-time home buyer should have an idea of how much you have and how much you owe to see your cash flow.
Track your spending pattern for a couple of months before looking for a house to buy if you want to see where your money is going. This should also help to let you know how your potential lenders will look at your income.
- Sorting Out the Paperwork
It pays to organise your documents. Things will be more convenient for your mortgage application when you know where the paperwork is. Get your latest tax return copies, and other relevant documents that will come in handy when you’re about to apply for a mortgage.
Can you afford it at this point? Check your own finances and see if your budget (including the potential amount you’ll get in mortgage) will afford the house you have in mind. You also might want to check online calculators to find out how much you can actually afford.
Besides the ratio of your income against your debt, factor in the amount of money you are going to spend in this venture. Determine what you can afford, and check it against the initial costs of buying a house to know if you can push through with it now or hold it off for a later date.
- Getting the Deposit Money Sorted
Currently ranging at 5% to 10% of the agreed selling price, this is the most crucial bit when preparing to buy your own home. You should at least have saved a reasonable amount to cover this expense. If you haven’t saved enough, you might want to consider borrowing from your parents or other family members.
Alternatively though, you can turn to various Help to Buy schemes implemented by the UK Government to afford your home buying venture.
And more importantly, start inquiring with mortgage lenders and brokers as you start the process. Check with friends, co-workers and neighbors to find out which lenders they enjoyed working with and ask them questions about the process and what other steps first-time home buyers should take.
This article was written by Joseph who works in conjunction with www.conveyancing24-7.com to bring consumers cheaper conveyancing quotes.