Everyone knows the benefits of getting on the property ladder. After all, buying a home is a massive investment and it secures your financial future. If you are a first time buyers, though, you might worry about getting a mortgage. There are many factors that brokers consider when it comes to granting applications. Here is everything you need to know.
The state of your finances
Before you apply for your mortgage, you need to make sure that your finances are in check. If you are in debt, you will struggle to get a mortgage loan of any sort. It is always sensible to pay outstanding amounts before you take out another loan. While you may want to rush to buy a home, now may not be the right time for you. You need to get your finances in order before you get a mortgage.
Your credit history and what it means
Do you know what your credit history is and how it affects you? If you have a poor credit score, it could mean that brokers will not give you a loan at all. There are particular companies that will grant you a mortgage regardless of your history. These lenders will ask for a massive deposit and their interest rates may be higher than average. If you want to get a reasonable mortgage, you should deal with your credit score first. You can boost this score by paying bills on time and saving money.
Your work status
If you are on a long-term work contract, you will have the best chance of getting a loan. If, on the other side, you are on a flexible contract or work on a freelance basis, you will find it hard to get a loan. Your work status will affect whether you can get a mortgage directly. The main reason for this issue is that lenders need to know that you can afford the repayments. If you can’t prove that you have a stable income, they will not know whether they can rely on your payments.
Saving for a deposit
Before you get a mortgage, you will need to save for a deposit. There was once a time when you had to save around 25-40% of the total cost for your deposit. These days, though, things are changing. You can often get a mortgage with just 5-15% of the value of the house. That means that you don’t have to pay as much upfront as you once did. Before you start applying for loans, you should save some money so that you can afford the deposit.
The Help to Buy Scheme
If you’re struggling to get a mortgage, the Help to Buy Scheme might be the best way forward for you. The first part of this scheme will help you with your deposit. If you put down 5% of the house value for your deposit, the scheme will put down the other 20% as a loan. That means that you will have 25% for your deposit, and so you have many options. The second part of the scheme helps the broker guarantee that they will not make a loss. Help to Buy will cover losses of up to 20% for the bank. That means that the interest rate of your mortgage will come down a great deal. It is worth considering this scheme if you are a first-time buyer.
If your a first time buyer and are looking for a good deal on your first mortgage, we can help. Just complete the contact form on our First Time Buyers Mortgage page and we will be in contact.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.