The first house you purchase is likely to be your most significant purchase to date.
There is probably an awful lot of money pinned on it all going to plan, and that’s why you have to make sure that everything is perfect before you finalise the sale.
This rule applies to more than just the property itself. Yes, it’s important to make sure that you have enough bedrooms, that the structural surveys don’t find anything too sinister, and that the location suits you.
However, it’s also important to make sure that you’re ready to buy at all. Jumping the gun can have serious financial consequences, as well as making it almost impossible to secure a mortgage.
If you’re starting to consider whether you’re ready to take the leap, read on to see whether you fulfil the average mortgage lender’s criteria.
Do You Have a Positive Credit History?
One of the main ways that lenders will assess your eligibility is by reviewing your credit history. Those with poor form will find it almost impossible to borrow a substantial sum, but they’re not the only ones that will face a problem; those without a credit record will suffer just as much.
If you’ve never had a credit card or been responsible for paying bills, then you might just fall into this category. Luckily for you, it’s easily remedied: simply take out a credit card for six months, meet your repayment terms, and you’ll have a great credit history to fall back on.
Is Your Job Secure?
Another criteria that lenders will rely on is an evaluation of your job security. If you’ve been in your current position for less than six months, you may find that it’s very hard to secure funding. Thankfully, the solution is simple: put your plans on the backburner for half a year, and then renew your search when you look a little more stable.
Those who are self-employed will also struggle, so it’s a good idea to either look for a new role in an established company or, less drastically, do some research into special self-employed mortgages.
Do You Have a Big Enough Deposit?
Although most lenders will be willing to extend capital provided that you have around five per cent of the total cost, this doesn’t mean that you’ll get the same terms as someone with a bigger deposit to hand.
Most lenders will use this as leverage to agree less than favourable terms, so a good rule of thumb is to make sure that you have at least 20 per cent of your purchase price in the bank. This way, you’re a lower risk prospect and this gives you a much better position to bargain from.
Based on your answers, are you really ready to buy your first home?