Taking out a mortgage and buying a home is a huge milestone associated with excitement, joy and success, but it’s also a very big decision that often comes with a long-term financial commitment.
With housing prices climbing each year, more Brits have begun applying for mortgages in order to purchase a home of their own. In fact, a recent nationwide survey conducted by Storage World found that almost half of the respondents had a mortgage. While this trend continues to rise, taking out a mortgage for the first-time can be difficult and daunting. Here are five important considerations to keep in mind before taking the plunge.
Understand your credit score
A good credit rating is essential to secure a decent mortgage. Lenders want to know that you are able to make timeous and consistent payments. Normally, a credit report is needed to secure a mortgage. These reports will include a list of credit cards, loans, overdrafts, mobile phone and utility payments. Make sure that you understand your credit score and that the report is accurate before handing it over.
Income determines your mortgage
Another aspect that lenders look at when determining your loan is your income. They want to know that you are earning enough money to afford the monthly repayments. A larger income will qualify you for a bigger mortgage, but be cautious of lending more money than you need.
Keep existing debt to a minimum
A mortgage is a big commitment that can put a lot of strain on finances if you’re not prepared. Any additional debts and missing payments only add to the pressure. Catch up on all missing payments and reduce debts before applying for a mortgage so that you can manage your finances easier (and look better on paper).
Lenders require a down-payment
Lenders typically require a deposit of at least 5%, with the option to put down a larger deposit. The higher the deposit, the better your interest rate will be. For example, if you’re able to put down 20% of the value, then your interest rate will be significantly lower than only putting down 5%.
Compare rates
Not all lenders are equal and it’s in your best interest to shop around and compare rates. While the basics will always be considered, such as your income and credit score, different lenders may offer you different rates so be sure to look at all your options before making a decision.
As exciting as buying a home can be, it can also be stressful. At Storage World, we strive to make the process easier for our valued customers. We offer flexible and convenient storage space to store your household belongings, as well as additional services such as removals. Get a self storage quote today to find out more!