Buying your first property is an exciting time; there are plenty of jobs on your to-do list, so it pays to get organized!
Get Your Finances In Order
Generally, you’ll need good credit to purchase a property. It’s advisable to check out your credit score and assess your income against your debts. Perhaps you already know that your credit score is low? In this case, there are several things you can do to improve your credit score:
- Look for mistakes: Obtain a report of your credit score and start by looking out for any mistakes and correcting them. Report any wrong information, (even if a small mistake like a wrong address).
- Pay off your debts: Getting rid of your debts will help to improve your credit score. Try debt reduction strategies such as the ‘debt snowball method’ or the ‘debt avalanche method’.
- Pay on time: Simple actions like paying all your bills on time sends out the right message to lenders.
Establish Your Budget
Most importantly, it’s vital to clearly establish your budget before you start shopping around. It’s usually advised that you seek out a mortgage payment that’s 30% (or less) of your monthly earnings. Remember, finding the right property for you shouldn’t be about finding the most expensive property you can get. Rather, you’ll want to take on a mortgage that allows you to comfortably manage the rest of your expenses.
Prepare your documents
Applying for a mortgage involves plenty of admin, so it’s wise to start prepping your documents early on. You’ll need documents such as bank statements, payslips, utility bills, ID, and so on. Both employed and self-employed individuals will need to offer evidence of their income over the last few years. Lenders will provide you with details of the documents you need at the beginning of the process.
You should begin saving as early as possible, the sooner you start saving, the sooner you’ll have the down payment. You’ll also need to factor in costs such as maintenance and moving expenses. To help you to save money, try the following finance apps:
- Mint: The application logs all of your expenses and accounts, creating a budget that works for you. Mint offers you details of your credit score, plus allows you to set bill reminders. The app separates your spending into categories so you can gain a clear picture of your finances.
- Good Budget: Using the GoodBudget app, you can split your spending into sections, arriving at a workable figure for each. The great thing about this app is that you can plan your finances as opposed to simply tracking them.
With the right budgeting tools you’ll manage your monthly finances a whole lot easier.
Find The Right Broker
It’s important to find the right broker, preferably a professional who has experience working with first-time buyers.
Your broker will support you throughout the process from the loan procedure to applying for government grants. You should do plenty of research beforehand to ensure that you get a competitive rate. While you’re at it, it’s handy to research the market and establish whether now is the right time to buy.
Many are wondering whether buying a new home during COVID-19 is the right decision. Mortgage prices have dropped considerably recently, meaning that now could well be a great time to get on the property ladder!