Stepping onto the property ladder doesn’t need to be a pipe dream. A few tweaks to your lifestyle and some forward planning could help you to receive the keys to your first home.
If you don’t want to waste money on rent, and wish to invest your hard-earned money into property, read these tips on how to increase your chances of securing a mortgage.
Improve Your Credit Score
A mortgage provider will review your credit score before accepting your application. The higher your score, the more trusted you will appear to a prospective lender.
If you don’t have a good credit score, there are actions you can take to improve it, such as:
- Making debt repayments in full and on schedule
- Reducing your existing debt
- Avoiding opening lines of credit, such as a loan or credit card
The higher your credit score is, the better the mortgage rate you will receive, which could help you to buy your property at a faster rate.
Find the Right Property
The property you choose can determine whether your mortgage application is accepted or rejected. Finding the right home for your budget could help you to avoid disappointment and receive the keys to your new address.
For instance, there are many beautiful new build houses for sale at Linden Homes, which will only require a 5% deposit. Plus, you could have access to their independent mortgage advisors when you buy a brand-new property.
Correct Credit Report Mistakes
Mistakes on a credit report could harm your score. As 20% of credit reports are believed to feature errors, it is vital for a budding homeowner to both spot and correct a mistake.
Common mistakes on a credit report can include:
- A former spouse’s information
- Mistakes caused by identify theft
- Debts you have repaid
- The wrong information (such as the creditor confusing you for another person)
- Outdated information
Many major reporting bureaus can provide a free annual copy of your credit report. It is, however, important to talk to your mortgage advisor before you do so, as frequent checks could damage your application.
Lower Your Debt-to-Income Ratio
A mortgage provider will review your debt-to-income ratio to determine if you could afford to make the monthly repayments. Many lenders believe a maximum front-end ratio of 28% is perfect.
If you’re worried an application could be rejected based on your salary, consider asking your boss for a raise if it is long overdue. A higher annual income and greater financial freedom could provide a mortgage provider with confidence that you’ll make repayments on schedule.
You also could lower the debt-to-income ratio by reducing your monthly debt. For instance, you could cancel subscriptions, overpay on loans to gain financial freedom, and switch to more affordable energy or insurance providers.
Owning your own home doesn’t need to be a pipe dream. If you choose the right property, lower your debt-to-income ratio, and improve your credit score, it could be a matter of time until you receive the keys to your first home.
James Daniels is a freelance writer, business enthusiast, a bit of a tech buff, and an overall geek. He is also an avid reader, who can while away hours reading and knowing about the latest gadgets and tech, whilst offering views and opinions on these topics.