Spring clean your finances and be ready to buy!
Looking to buy, move or upgrade and take advantage of record low interest rates? Spring clean your finances to make sure you are mortgage ready.
Spring is typically a time when temperatures and the real estate action heat up and if you’re looking at buying or upgrading, there is some great rates to take advantage of! However in order to be on the front foot getting the best deal or any deal at all, you will first need to make sure you are attractive to lenders.
There are many things lenders take into account when looking at your application, they all impact your chances of getting approved and how favourable the terms of your mortgage will be.
Ultimately the strength of your application affects not only the cost of your mortgage, but how much you can actually borrow.
Doing the groundwork now means a faster process when you do need to secure that loan, and hopefully more favourable terms.
What will a lender consider
Deposit: The size and requirements can vary from lender to lender. It pays to know the target you need to hit. The composition of your deposit is also important, some lenders require at least 5% of proven genuine savings if you have less than a 20% deposit.
Personal loans and other debt: Personal loans, hire purchase, student loans and credit card debt can all impact your ability to borrow. Essentially the more debt you have, the higher your repayments will generally be meaning you will have less spare cash each week to put towards your mortgage repayments.
Account conduct: Lenders are like landlords. They want to see a track record of responsible account conduct. Dishonour fees and dipping into the red without having an authorised overdraft don’t reflect glowingly on your ability to manage your mortgage repayments.
Employment situation: Lenders tend to be a bit more wary of lending to people on 90 day trials or those who have jumped between a few jobs quickly. If you’re self-employed or contracting there are some extra considerations to take into account such as how your last set of completed financial statements look.
Credit history: Are there any historical credit issues or records of non-payment? This is where those old utility bills that went astray when you moved or gym contracts you have let slide come back to bite you in the backside?
Family situation: If you are considering growing your family or buying a new car to get the kids to sports on the weekend lenders will consider the impact these could have on your weekly cash flow.
What can I do to get prepared?
The best place to start is to spring clean your finances to make sure you are mortgage ready.
Pay your bills on time: Your credit score can be impacted by late and non-payment and it’s hard to erase that bad track record.
Get your personal debt sorted: Big balances on credit and store cards, hire purchases, and personal loans can all impact your ability to borrow. If it's proving difficult I can talk you through some options around debt consolidation.
Mind that large credit card limit: Even if you are diligent at paying off your credit card, most lenders will still make an allowance for you spending up to your limit and look at what repayments will be required on that balance, this can seriously impact your borrowing position. So consider lowering the limit to only what is needed.
Budget and show good saving habits: Sticking to a plan and having strong savings habits will not only help you build the deposit you need but will reassure lenders you can stick to a plan, which is key when trying to repay a mortgage.
Don’t panic, like anything in life, planning is key.
I can help ensure you understand the rules around lending and what different lenders need to see from you. We can make a plan to spring clean your finances and present you in the best light to prospective lenders.
It’s never too early to get prepared by coming in to see us about getting ready to buy this spring.
My team and I will get you in financial shape and ready to buy.