If you’re thinking about buying a home on one salary, you may feel like you’re limited in which properties you can purchase. However, this is not necessarily the case. One-income families and singles can work hard to make sure they have the financial ability to buy the property they’re looking for. With careful planning, they can improve their financial situation and put themselves in a better position to buy the home of their dreams.
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Prioritise Your Savings
One of the first steps to buying a home on one income is to make sure you have a good amount of savings. You can do this by putting away, for example, ten per cent of your income into a savings account or using automated payments to take a percentage of your paycheck and transfer it to your bank account.
This can help you build a decent amount of savings, which you can use to supplement your down payment on your home. If you can save up a sizable down payment and pay cash for your home, you won’t have to worry about paying mortgage payments, and you’ll be less likely to take on any debt.
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Save for a Mortgage Down Payment
You’ll also need to have a sizable enough down payment to be able to buy a percentage of your home on one pay-check. This isn’t always possible, but you can try to put more money into your savings account and use it to supplement your down payment.
If you can put, for example, 20 per cent down on your home, you’ll be able to avoid paying private mortgage insurance (PMI) payments. PMI can cost you hundreds of pounds a month, so it’s best to avoid it.
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Clear Any Debt
Debt can be a severe roadblock to buying a home if you have too much of it. Before maxing out your credit cards or taking out any loans, you should clear out any debt. For example, if you have any credit card debt, you should pay off this debt as soon as possible to improve your credit score and look more attractive to lenders. You can then apply for a mortgage with good credit and a lower chance of you not being able to pay your mortgage.
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Improve Your Credit Score
If you have bad credit, you might need to work on this before successfully buying a home. You should meet with a credit counsellor or work to consolidate your debt and make sure you’re only using one card. If you’re worried about taking out a second mortgage or taking out a loan, you may consider improving your credit score before pursuing a home loan.
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Be Realistic About What You Can Borrow
As a single borrower, you’ll have to keep your finances in mind when applying for a mortgage. It’s essential to get an accurate picture of how much you can borrow so you don’t get overwhelmed by a large mortgage payment. You’ll pay more interest if you borrow more, so you may want to consider refinancing your home to take out a mortgage that will be more manageable for you.
Conclusion
As a single borrower, finding a great home isn’t always easy. Finding the most suitable mortgage program can be challenging, and you may have to compromise on some features. However, with the right amount of planning and budgeting, you can increase your chances of finding a great home and a mortgage program that’s a good fit for your financial situation.
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.
A Move Brokers are qualified professional advisers who can help you with your specific mortgage or protection insurance needs. We work closely with regional estate agents in Chester, Wales, Wirral, Liverpool and surrounding areas and actively analyse the marketplace to provide you with the best service. Whether you are a first-time buyer, looking to remortgage or even purchase a buy to let property, we can help you on your journey. Book an initial free consultation to explore options for first-time home buyer loans!