Money

How to Prepare Your Finances for When You Buy Your First Home

Buying a home for the first time is a painstaking process. It’s never easy to secure a mortgage in the current economy and it’s even harder to find a home for the mortgage that’s sometimes offered. Therefore, it’s important you prepare your finances well in advance so you get the best deal on a mortgage and you get a deposit that’s going to contribute handsomely. If you’re looking for preparation tips, consider the following points a few years before you think about applying for a mortgage – it could save you thousands and give you the best mortgage deal available.

Make Wise Investments

There’s no doubt that property is usually a good investment which will mature over time, and for many of us, our home will be the biggest investment we make in our lives. However, there are other, smaller investments that you can make with advice from companies like SoFi (https://www.sofi.com/invest/), which will give you an excellent return over time.

Work Hard and Stick with the Same Job

Sticking with the same job for years is easier said than done. But, it’s definitely worth getting your head down now as it could help you save on your mortgage when you finally apply for one. Lenders want as much security as possible when it comes to dishing out loans. So, sticking with the same job to show a lender you’ve had a reliable regular income for the past few years is one way of getting a good deal. Of course, there’s nothing wrong with changing jobs if you’re not happy, as long as you have a regular income paid into your bank. However, a few years with the same employee could help pay dividends in the future and could be the difference between an excellent mortgage deal and a higher interest product.

Ready Your Credit History Now

If you have little to no credit history when you apply for a mortgage, your application could be declined as if you have a poor credit history. If you don’t have a credit history, banks aren’t going to know whether you’re reliable. They may even think that you’ve only recently sorted out debts that are no longer showing on your credit file. Debts only stay on your credit file for six years whether they have been paid or not, so lenders may well think you haven’t got any history for that reason. The best way to counter this issue is to prepare your credit history now and save for the next couple of years. If you need a new car, look at whether it’s a viable option to get a car on finance. Or, apply for one of the many money loans just to give your credit history a good boost for when the time comes around.

Look at Your Mortgage Options

If you have a partner and you’re both planning on moving in together, that’s a good start to help bring mortgage repayments down if you both have decent incomes and eventually a good deposit of 20% or more. However, if you’re on your own, you may want to consider getting on the property ladder with a family member or friend. This could help boost your credit history further and it could give you a way onto the property ladder yourself once you’ve built up enough equity. The benefits of buying a house with someone else are endless in the sense you can carry on saving for your future as the equity in the house grows.

Make a Budget and Stick to It

There’s no point in making a budget if you’re unwilling to stick to it for a few years. The budget should include all your outgoings, personal expenses, and also how much you can save each month. Saving for a house is hard work as something always unexpectedly pops up. But, with the right motivation to own your own home, saving can be done with a realistic budget in place. Don’t overdo it though – you don’t want to put yourself out and not enjoy life while you’re saving for a house. At this time, the average house price in the UK is £211,000, so if you’re opting for a 20% deposit like most other first-time buyers, you’re looking at £40,000+. Therefore, you’ll want to spend at least five years trying to save just so you have other funds left over for other expenses and adventures.

Look for the Best Rate on Savings

Don’t just save money in your current account when you can start an ISA and save more money for the future. Saving takes plenty of time, but with the right savings or ISA account at your disposal, the time it takes to save will be less. Always look for the best rates from your bank or look elsewhere at other high paying ISA’s.

Back in 2000, the average house price in the UK was a measly £75,000, but now with house prices well above £200,000, it’s much harder for first-time buyers to get on the property ladder. Therefore, by taking advantage of the above tips for finance preparation purposes, you can ensure you have the best chance of securing not just a mortgage but a mortgage that has a reasonable repayment plan.

Leave a Reply

Your email address will not be published.