For most first-time buyers, purchasing a property will be the greatest investment of capital you’ve ever made. It is a huge financial commitment, and one that you absolutely must be prepared for.
The majority of people will, of course, turn to a mortgage provider to help them fund their purchase. Finding the right lender is a time-consuming and complicated process, and yet amidst the pressure of getting it right, many people fail to consider one very important thing: whether they’re ready to take out a mortgage at all.
If you’re thinking of getting your foot on the property ladder, here are a few important things to consider.
Are You in a Steady Job?
Assessing your potential mortgage provider is important, but don’t forget that they’ll be evaluating your suitability at the same time. If you don’t have a steady job, most lenders won’t be willing to consider you. Proof of income is required before credit can be offered, and if your application doesn’t meet your providers exacting standards, then you’re likely to be turned down. This doesn’t mean it’s impossible to broker a deal, but it can make things particularly hard for those who are self-employed or on a fixed-term contract, and may mean that you have to rethink either your options or your lifestyle.
How is Your Credit History?
Another criteria that lenders will use to assess you is your credit history, and a poor credit history is often a reason to refuse an application. However, it can also be a problem for those who’ve never taken out credit and so have no history at all. If you fall into this category, it’s a good idea to take out a credit card (making sure that you meet all of your repayments, of course) at least six months before you consider seeking a mortgage, so that lenders have something to assess you by.
Have You Saved a Suitable Deposit?
Some mortgages require deposits of as little as 5 percent of the price you wish to borrow, but this doesn’t mean that saving this amount is the best course of action. The more you can save for a deposit, the better the deals that will be available to you. Remember, too, that you’ll need enough to cover stamp duty and survey fees on top of this.
Can You Afford the Mortgage Repayments?
Perhaps the most important thing to consider is whether or not you’ll be able to meet your mortgage repayments. Your deposit will account for only a small part of the purchase price, but you’ll have to pay far more down the line. If you take out a mortgage, you’re making a long-term commitment to covering monthly repayments, so you need to know that you can afford this. These payments will rise as interest rates increase in the near future. If such a rate rise would leave you struggling, then it might be that you need to reassess your long-term plans.
If none of these questions raise any doubts in your mind, you might just be ready to buy.