Mortgage tips to have you walking on air
First published 04 March 2019 • Updated 24 July 2019
Is your dream of home ownership still stuck on the ground? Here are our top mortgage tips to help it take flight. Article by Nick Green.
Getting onto the property ladder isn't easy. Not only do you have to save up a large deposit, but you also have to convince a mortgage lender that you're a safe lending prospect. It's this second challenge that can feel the most daunting.
Esme (28) is a first-time buyer. ‘I really want to get on the property ladder before I’m thirty. The trouble is, it doesn’t even feel like a ladder anymore. As a first-time buyer, everything is so stacked against me that buying a home seems completely out of reach. Renting is so expensive it’s hard to save up a deposit, and mortgage companies ask you so many tough questions and then offer a really poor deal if you don’t meet their standards. It does feel like being nailed down.’
So it’s no longer a property ladder – now buying a home seems as hard as lifting a house with balloons, like in the film ‘Up’. Impossible? Not at all! Here’s how you do it.
Getting your home-buying dreams off the ground
Okay, Esme. To get off the ground you need to do two things. Firstly, decrease your load. Secondly, increase your lift.
Your ‘load’ is everything that might cause concern to a mortgage provider. These include liabilities such as:
- existing debts
- unused or forgotten credit cards
- question marks on your credit file (you need a strong history of borrowing and repaying)
- other addresses
- financial ties with other people who have poor credit ratings
- not being on the electoral role.
Identify all this ballast and ditch it now.
How to lift your mortgage chances
Your ‘lift’ is everything positive you can bring to your mortgage application. This includes the size of your deposit, but also how much extra you can squeeze out of your income.
- Calculate your current outgoings and see where these can be reduced.
- Draw up detailed spending plans so you know exactly how much you can afford in monthly mortgage repayments, and can prove it.
- If you expect to buy in a few years’ time, try and make the most of a Help to Buy ISA or Lifetime ISA (LISA). With a Help to Buy ISA the government will add 25 per cent to your monthly savings up to £200, meaning an extra £50 each month, up to a maximum contribution of £3,000. With a LISA the bonus is also 25 per cent, but the maximum is higher - you can save up to £4,000 per year (with a bonus of £1,000 annually). A LISA is currently the best way to save up your deposit.
- See if there are any other Help-to-Buy schemes from which you can benefit.
- Finally, seek advice from an independent mortgage broker who can find you the best deal from across the whole of the market. This can save you thousands in the long term.
Like 80 per cent of people who seek advice on their mortgage application, Esme has her mortgage approved first time and is up, up and away!
You can book a free consultation with a mortgage adviser today.
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