Throw it back to just under a decade ago, and mortgages were pretty easy to come by. In many ways, they were a big factor in the ‘credit crunch’ that happened around 2008 and 2009. People could get a loan for a mortgage pretty easily, but then not everyone was able to pay them back. So in recent years following this, lenders have become much more strict about who they lend to and how much they’re willing to lend them. Things are improving now, but it can still be a hard time to get a mortgage, especially if there a few factors that aren’t playing in your favor.
If getting onto the property ladder is something that you want to be doing sooner rather than later, then you need to think about the following, otherwise, you could struggle.
There are some schemes that you can apply to that are nearer to 100% mortgage or are a port-ownership type of thing. But if you want to get onto a more straightforward mortgage, then you do need to have a deposit. According to moneysupermarket.com, the minimum is 5% of what you want to borrow. It shows the lender that you mean business, and shows that you can save and do have jobs to pay the money back with. It shows a certain level of trustworthiness. And to a bank that could potentially be lending you hundreds and thousands of pounds, you need to show your trustworthiness.
Your Credit Score
There is no beating around the bush here; your credit score will have an impact on whether you’re able to get a mortgage or not. Your credit score is an indicator of how well you have been able to pay back money that you have borrowed in the past. If it is pretty bad, then a bank isn’t likely to lend to you. It is a lot of money after all. So check your score and then take steps to improve it.
You could consolidate any existing debt that you have with a loan from somewhere like personalloan.co, for example, just as long as the interest is a good rate. Budgeting, and making yourself a bills calendar is a good idea, so that you know what you owe, to who, how much, and when it is due. Don’t miss payments!
Consider Your Employment
When you’re planning to get a home and a mortgage, all the bank is concerned about is how much money you earn, what you already owe, and if there will be enough to pay the mortgage back each month. While there is some protection if you are made redundant, is your employment looking stable at the moment? If so, they can verify with your employer that you are in fact employed. But if you are thinking of becoming self-employed or starting your own business, for instance, it may be better to apply before you do that, or wait for a few years afterwards. That is because you’ll need to show your earnings records, and they’ll only be consistent after a couple of years.