How we’re planning ahead for a mortgage application
It’s been a difficult year so far in so many ways, but family finances have been hit particularly hard this year. We’ve been through a global pandemic which has led to job losses across the world, and we’re not out of the woods yet! For us, this year was meant to be the year we moved house. We’ve been planning it for years. But, because of all the uncertainty surrounding job security and finances at the moment, we’ve decided to hold off until next year. On a positive note, this does give us an extra twelve months to get our finances into tip top shape.
Like many people buying a house, we’ll be taking out a new mortgage when the time comes. This is obviously a huge financial commitment and a bit of a nail biting thing to do. I always think that we’ll have trouble when it comes to things like this. I guess it stems from having financial difficulties in the past, I can never quite believe that we’re in a better place right now. Because of this, I’m doing absolutely everything in my power to make sure we have a really good chance of being accepted for a mortgage.
Saving for a deposit
We’re fortunate as we have equity in the property we own, so we will have a decent deposit from that. We are also waiting for some inheritance money to come through which will be a huge help here.
As well as those lump sums, I’ve been working extremely hard to save up a pot of money that we can add to our deposit. As more than half of my income is from my self employed work, it will be harder for us to get a good deal on a mortgage. The bigger the deposit, the better.
Knowing what we can afford
In case you haven’t followed our story until now, we currently rent a house. We have a property that we rent out too, and we rent the house we live in. We did this for a number of reasons but it does mean that we pay a fair chunk of our income on rent which I often think of as wasted money. It does mean though that we’re used to budgeting a large amount each month just to cover the rent.
I’ve used a mortgage calculator to get a good idea for how much we’d be likely to be paying each month. These aren’t my figures, they’re just to show an example:
Keeping our credit scores healthy
Whenever you apply for a loan, mortgage or credit product, the company will carry out a credit check to see whether you’re a good risk. We need to make sure our credit scores stay healthy and that there’s nothing untoward on there. I use a free credit checker each month to make sure everything is in order to give us the best chance of being accepted.
Watching what we’re spending
Many mortgage providers like to see a few months of bank statements before they make a decision. It’s important not to be frivolous with your money or overspend in the run up to applying as this can be a red flag and may even mean your application is declined.
I use online banking and check our accounts every day just to make sure there aren’t any unusual transactions on there and that we’re not overspending.
I’m hoping that this time next year we will be well on the way to owning a new home, so I’m doing all I can at the moment to make that dream a reality.
*This is a collaborative post.
