#Collaborative post
A lot of people want to own their own home rather than rent. There are many reasons for this, but a big one is that they will have an asset that they can pass on to their children or use to retire comfortably on. Whatever your reason, if you want to buy a property, it’s likely you’ll need a mortgage. So, once you have saved up your deposit, it’s crucial you know what else you need to do before applying for a mortgage to ensure you are successful and, ideally get a good rate. Read on to find out more.
Pay Off Your Debt
When it comes to a mortgage, lenders have different criteria, which is why you can get a mortgage even if you have bad credit, for example. However, something that all lenders agree on is that if you have a lot of debt, they won’t be sure you can afford a mortgage as well.
You will have worked hard to save up your deposit, but it might be better to use that money to pay off any outstanding debts. In that way, not only can you show lenders that you can easily afford the mortgage repayments, but you’ll quickly be able to top up your deposit fund again with the money saved by paying off the debts in the first place.
Check Your Credit Score
Just taking the time to sign up and keep an eye on your credit could make or break your chances of getting a mortgage when the time comes. It may also save you a lot of money because people with higher credit scores usually get lower mortgage rates, which means they pay less each month and save a lot of interest.
If some of your scores aren’t great, fix the problem(s) right away so you’re in great shape when it’s time to apply. Something that will definitely help is paying off your debt, as mentioned above. Other ideas include not applying for too much credit at one time and not having enough credit – you need a little to prove you can pay things back. You might even find there are errors on your credit report that you can put right, but that might have been causing you to have a lower score.
Apply For A Mortgage Agreement In Principle
You can find out how much money you can borrow by asking for a “mortgage agreement in principle” (AIP). Basically, an AIP is a letter from a bank or building society. It tells you how much of a loan you might be able to get based on a first look at your situation. An AIP is free to get and can be really useful in giving you an idea of where you stand.
Most AIPs last anywhere from 60 to 90 days. You can always try again if it runs out before you need it. But remember that an AIP is just a guess. It’s not a real offer of a mortgage, and the lender who gave it to you can still turn you down. However, it can show you where you need to improve or what you need to change to get a better rate or borrow more.