If you are looking to buy a new home soon, congratulations! This is a very exciting time for you, and there’s so much to look forward to.
However, there’s always a boring, technical part—being prepared for all the financial obligations that come with purchasing a property. Should you decide to take out a mortgage, you need to lay out some important groundwork for a smooth application process.
If you want to increase your chances to be approved for a mortgage with reasonable interest rates, take note of the following tips and follow these recommendations:
- Check Your Credit Score
Before you apply for a mortgage, you should first take a peek at your borrowing history and credit score. By acquiring these reports, you will be able to check them over for inaccuracies, and you can also work on improving your score if it needs a little push.
Credit reporting companies like Equifax and Experian give ratings from poor to excellent, and these findings can help mortgage lenders determine your creditworthiness and, with that, the type of rates they can offer for you.
- Pay Your Bills on Time
One great way to boost your credit score (and therefore help your mortgage application) is to ensure that you pay your bills on time. Exhibiting good paying behaviour is crucial for any type of loan you will apply for, so make sure to get all of your ducks in a row on that end.
If you pay all of your bills on time and work hard on clearing your debts, this good habit will positively impact your credit score, showing lenders that you are more than capable of paying your mortgage payments month after month.
- Make Sure You Have Stable Employment
Another thing that you have to prove to your lenders is that you have a stable monthly income. At the very least, you should have some proof that you have been employed for at least six months. Aside from a certificate of employment, you should also have your latest payslips ready as well.
By presenting documentation to prove your ability to pay, your lender will identify the type of mortgage offer suitable for you and your current financial situation.
- Pay Off Your Loans and Credit Cards
Before you apply for a mortgage, work on paying off outstanding loans and your credit card. For your credit card, pay off at least the minimum monthly payment. But if you can, you should try to pay off the remaining balance.
Aside from that, try to avoid taking out any new loans if possible, as it may lower your chances to be approved for a mortgage and restrict the mortgage rates available to you if accepted. If you have large loans outstanding at the time of application, this could count against you when conducting credit scoring and an affordability assessment.
- Start Saving to Make a Deposit
Finally, the best way to prepare for a mortgage is to build up your savings. While there’s nothing wrong with treating yourself once in a while, it would be best to tighten the belt a little and focus your funds on what you need. Being careful with your income will help you complete the funds for your deposit and get a headstart on the mortgage process.
Final Thoughts
Trying to buy your first home can be complicated, but you can smooth the way if you prepare for it as early as possible. If you feel like you need more support, you can get help from local mortgage advisors.
Here at A Move Brokers, we can help you secure a first time home buyer loan, home loan refinance, bridge lending, and other mortgage services. Book a free consultation with one of our advisers today, and let us help you!
This article is for information only and should not be seen as advice or a recommendation to act.
As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.