Applying for a mortgage successfully is not luck. There are two major factors you need to be in control of, Budgeting and unsecured debt. Taking control of these areas will help you in your mortgage application as well as in your day to day financial life.
First off and arguably most important is budgeting. The simple act of making and sticking to a monthly budget is the most effective way of taking control of your finances and preparing you for a mortgage. It will help your piece of mind and highlight any areas you may need to review or cut out completely. You should aim to keep your spending within the money you have and the limits you set yourself. Every pound you earn needs to be allocated to an expenses category (including savings), check how you are getting on mid-way through the month, this will help to keep you on track. It seems simple, but it is incredibly effective!
When a lender reviews your application, they are checking you can afford the mortgage you have applied for. A major contributor to the affordability calculation is unsecured debt you may have.
The more money you owe on hire purchase, unsecured bank loans or credit card balances the smaller loan you will be able to obtain from a mortgage lender. We usually take out these debts to buy things we want NOW. Simply put if you can’t afford to buy that watch or sofa you want, you shouldn’t. Save up for it instead through budgeting your income. Pay off credit cards and stop paying unnecessary interest. This will not only show an underwriter you are able to budget and save but also a financial intelligence and maturity. After all, the more committed outgoing you need to pay every month means you have less money for a mortgage payment, and therefore less borrowing ability.
Spend time on your finances before you approach a mortgage lender to present yourself in the best way possible. After all you are asking for a significant loan, and the lender needs to be sure you can pay it back.
If you want to discuss budgeting or unsecured debt with one of our advisors don’t hesitate to give us a call 0800 8620 840 or fill out an enquiry form on our website www.ptmortgagesltd.co.uk