plan and manage your mortgage – When buying a home, it is only natural for you to want to purchase the best property you can afford. However, you should not overstretch yourself, as you may end up falling behind with your mortgage repayments. In recent months, lenders have introduced tougher new rules on affordability and, as a result, they will closely examine your income and outgoings before they will agree to provide you with a deal.
While the prospect of being turned down for a mortgage may worry you, if you are considering taking out a mortgage, it is essential to step into your lender’s shoes and do your own sums to determine whether you will able to keep up with your mortgage repayments. Calculate the true cost of your mortgage repayments To work out whether you will be able to borrow the money you need to buy your dream home, you will need to enter your household bills and other living costs into a budget calculator.
You will then be able to calculate the amount of money you have left to spend at the end of each month. Once you have worked out your budget, you will be able to use a mortgage affordability calculator to determine the size of the mortgage you will be able to afford based on the interest rate your lender is offering. When performing your calculations, you must take into account interest rate rises and any fees you will incur when you take out your mortgage. Most lenders will charge you arrangement and/or booking fees, which will add to the cost of your monthly repayments.
Check your credit rating Before you apply for a mortgage, you should also check your credit report. A poor credit rating can be a barrier to getting an affordable mortgage, but the more insight you have about credit, the easier it will be for you to improve your credit rating and get a good deal from your lender. To arm yourself with the knowledge you need to achieve and maintain a favourable credit rating, visit the Experian YouTube channel. Here, you will find a host of videos that will help you to improve your awareness of credit and the way in which it will affect the affordability of your mortgage. If your credit rating is less than favourable, remember that simple actions, such as registering to vote and closing unused credit accounts, can improve your chance of acquiring a mortgage.
Review your budget regularly Once you have secured a mortgage, it is a good idea to schedule regular budget reviews. If your circumstances improve, you will need to ensure that you make the most of your extra income, while if they change for the worse, you will need to identify areas where you can cutback so that you can still manage your mortgage effectively. Face mortgage problems head on If, despite your best efforts, you experience problems with paying off your mortgage, you must take swift action to avoid falling into debt. If your lender has reason to believe that you are not dealing with the problem, they may take court action against you and you could lose your home.
Posted by My First Home Blog