Pitfalls to avoid when preparing for your first mortgage
There are moments in life that we reach and find ourselves thinking “I’m an adult now”. Going to uni, getting your first job, leaving home, looking to buy your first home.
With each milestone we prepare and build up to the moments and buying your first home is no different.
There are however certain things that you should avoid doing before you get around to applying for your first mortgage that will make the whole process smoother when the time comes.
Don’t miss payments on any debts
A single missed payment can mean that some lenders will not lend to your for 6 years. You could find yourself in a position of missing out on a great rate due to one mistake or badly timed payment. Set up direct debits to avoid missed payments and keep record of when payments are due.
Don’t take out any new debt
New loans and credit cards will need time to establish themselves before you apply for a mortgage so that the lender can see a proven track record of timely payments
Pay off any credit card debts if you can
A debt on credit card can disproportionately affect how much you can borrow. You don't want to be in a position where a £800 credit card means your chosen lender reduces their mortgage offer by over a thousand pounds. With the shortfall you would be in a position of either asking the seller to reduce the price or finding the shortfall in cash.
If you have help with your deposit
If you are receiving help with your deposit you need to ensure that the deposit is in place and ready to go. Banks will ask for track records dating back a year to show where the money has come from. If it is a gifted deposit don’t be surprised if asked to confirm that the money is not repayable, this is normal.
If you are self employed you need to make sure your accounts are up to date. Bank lenders will require two - three years of accounts as proof of income.
With these steps you put yourself on a great footing for approaching banks or mortgage advisors directly and saving yourselves the stress of finding out that your past could have a negative effect on your step towards the future home you want.
Your home may be repossessed if you do not keep up repayments on your mortgage.