Getting mortgage ready: A guide for first-time buyers

Many aspiring homeowners are facing new challenges in securing their first mortgage. The journey to homeownership can seem daunting, but with the right preparation, it’s achievable.

Understanding Affordability: Your borrowing capacity hinges on your income, expenditures, and the size of your deposit. When you apply for a mortgage, lenders will conduct a thorough assessment of your financial situation to determine what you can comfortably repay. Utilise the services provided by your adviser to determine which lender will suit your needs. Additionally, a variety of platforms offer useful calculating tools to gauge what you might qualify for.

Building a Deposit: Saving for a deposit is often the most significant hurdle for first-time buyers. While a 5% deposit can open doors to specific mortgage deals, aiming for 10% or more can unlock more competitive rates. Financial help from family can bolster your deposit amount and improve your mortgage prospects.

Exploring Mortgage Options: There’s a range of mortgage products available depending on your deposit size. While 95% loanto-value (LTV) mortgages exist, opting for a 90% LTV or lower can lead to more favourable interest rates. Contact your mortgage broker for support and advice when searching for the deal that suits you.

Managing Your Credit Profile: Before applying for a mortgage, review your credit record with agencies. Ensure your information is accurate and up to date. Address any discrepancies and consider adding a notice of correction to explain special circumstances affecting your credit history. Avoid unnecessary credit applications leading up to your mortgage application, as these can impact your credit score.

Financial Discipline: Leading up to your mortgage application, maintain disciplined financial habits. Avoid new loans or buy now, pay later schemes that could negatively affect your credit profile. Lenders inspect bank statements to assess your spending patterns, so it’s wise to prioritise essential expenses and cut back on spending. Despite the challenges posed by a competitive property market, there are viable options and resources available to support you on this exciting journey towards homeownership. For more information, contact your adviser who can support you and discuss the options available to you.

If you’d like to discuss the options available to you, contact your adviser today.