Buying a house is much harder for first-time buyers than it has ever been before. Banks are reluctant to lend unless they can see that you’ve got a good deposit, and can prove where it’s come from. You’ll also need a fantastic credit history and score, stable employment, a good income and reasonable expenditure. Add to this the facts that the cost of living is much higher than it used to be, and the average income isn’t rising at the same rate, and it’s easy to see why so many young people are still living with their parents or renting even once they’ve got married themselves.
However, it’s not impossible. If you are sensible and very well prepared, there’s nothing to stop you from getting a mortgage. Here’s what you need to do.
#1: Check Your Credit
The first thing to do is check your credit score. You can do this online for free. Then, you need to improve it. Even if your score is great, it’s worth checking in detail to see if there is anything on it that shouldn’t be, to make it even better. If your score isn’t high, look at how to repair your credit and start making some simple changes. Either way, you need to know what you are working with.
#2: Check Your Links
Unfortunately, getting a mortgage isn’t just about you. Obviously, if you are making a joint application, your partners finances matter. But, if you have ever been linked to someone else financially, perhaps with a joint bank account or credit card, their credit score could still affect your chances, even if it was a long time ago. Make sure all links are cut, and there’s a clean break to help.
#3: Stop Spending
Applying for a mortgage isn’t just about your income and savings. It’s also about what you spend. Lenders will want to look at at least three months’ worth of bank statements. So, in the three months before you go to see a lender or advisor, spend as little as you possibly can. Cancel any unused memberships or anything that you can live without for a few months. Cut your shopping bill, stop going out and don’t spend on anything that you don’t need. This will show that you are sensible with money, can live on a budget and prove that you can afford any repayments.
The bigger your deposit, the more chance you have of being accepted by a lender. If your deposit is coming from a parent or relative, they will have to write you a letter confirming that it’s a gift, not a loan, or the repayments will be considered when working out affordability.
#5: Consolidate Debts
If you’ve got more than one debt, perhaps from overdrafts and credit cards, it’s a good idea to take out a consolidation loan. This often means your interest rates are lower, you’ll be debt-free faster, and it shows that you have a sensible approach to money. It could even improve your credit score.