Your Five-Year Plan for Getting a Mortgage

Getting a mortgage is much harder than it used to be. House prices are astronomically higher than they were 20 years ago, meaning you need a much larger deposit. Lenders are still reluctant to give out such large sums of money unless they can be absolutely certain they will be getting it back, so even with a huge deposit, there’s no guarantee that your bank will lend you the rest. And, the ever-rising cost of living means it’s almost impossible to save that deposit in the first place. Because of these factors, the average age of the first-time buyer is significantly older than it used to be and many people approach middle age still living with their parents.

 

This means that you can’t just decide it’s time to buy a house. Instead, you must plan and get your finances in order first. Having a five-year plan gives you plenty of time to prepare and ensure you’re in the best position possible to get your application accepted.

Settle Down

Banks love stability. They want to know that you’re going to be living in your house for a while and that you’re not the kind of person that’s likely to move about all the time. They don’t want a flight risk. So, if you’re not happy with your current home, look at some cool apartments for rent and settle down.

Stay in One Job

This is part of showing stability. But, it also gives assurances that you’re unlikely to become unemployed or suddenly find yourself on a lower income. When it comes to applying for a mortgage, the longer you are in the same employment, the better.

Improve Your Credit

Your credit score is basically how lenders assess how good you are with money. To get a good credit score you must pay all of your bills on time and manage any debt well. Having debt is never great, but paying it off on time and managing it well can actually help your credit score. Other ways to help include registering to vote at your current address, applying for as little credit as possible and paying other bills on time.

Save a Deposit

Many of us put off saving for a deposit because we think we’ve got a long time. But, when it comes to large amounts of money, five years isn’t actually that long. Think about it, if you save $50 a week, for five years, you’ll have $13000. That’s realistically not even a 10% deposit. Stop putting it off and start saving now. Try to clear debts first, as these are costing you money that you could be saving.

Stop Spending

Right now, stop spending unnecessarily. Set yourself a weekly budget and stick to it. Cut your shopping bill, stop buying luxuries and start finding cheaper ways to have fun. This will help you save a deposit faster, but when you apply for a mortgage your lender will want to access your outgoings to prove you can pay it back. Five years’ worth of bank statements showing that you can live on a budget will help.

Getting a mortgage is difficult, but by no means impossible. Start planning now and you’ll be fine.