If you are considering purchasing your first home in the not-so-distant future, there are several steps you must consider beforehand. By doing so, you can ensure you are sufficiently prepared to become a homeowner and prevent yourself from making a costly decision that you may come to regret down the line. Continue reading to familiarise yourself with a number of steps to getting on the property ladder.
1. Find full-time employment
If you are currently in part-time employment, finding full-time employment should top your list of priorities when it comes to getting on the property ladder. This is one of the first factors lenders will take into consideration during the process of determining whether or not to offer you a mortgage. As a result, it can be the difference you qualifying and being forced to continue your search elsewhere. This is largely due to the fact that full-time employment provides you with the stability of regular income and will reassure lenders that you are capable of meeting your monthly mortgage payments. If you are a recent graduate, it can be tempting to opt for part-time employment or spend a year travelling, but this can delay the process of getting on the property ladder in the long run. If becoming a homeowner is your long-term goal, time is of the essence.
2. Pay off any outstanding debt
If you have any outstanding debt, such as an unpaid credit card or missed car finance payments, you must pay it off before you even consider setting foot on the property ladder. Aside from whether or not you are in full-time employment, this is also one of the first factors lenders will consider during their initial affordability assessments. They do this by analysing how much of a percentage of your monthly outgoings is spent on unsecured debt repayments. By doing so, they can determine the monthly mortgage payments you are likely to be able to afford. If you are in this position, however, you must remember to pay off any outstanding debt in the correct order with the payments with the highest interest rates, such as credit cards, ticked off first.
3. Save as much money as you can
If you have decided to purchase your first property, you must save as much money as you can. With the average first-time buyer being offered a deposit of 15% and purchasing a property with an asking price of around £220,000, you should aim to save a minimum of £33,000. It may sound like a substantial amount of money but by starting early and spreading your savings across a number of years, you can build your deposit on a gradual basis. To find out how much money you need for a deposit, a loan calculator can allow you to estimate your monthly mortgage payments ahead of time. In addition, you may also be able to boost your savings by cutting back on non-essential spending and reprioritising where your money goes. This is because lenders will also analyse your spending patterns in the months leading up to applying for a mortgage or home loan.
4. Perfect your credit score
When it comes to getting on the property ladder, you must take the time to perfect your credit score. A credit score, in the simplest of terms, can be found within your credit report and details any outstanding debt you may have including credit cards, car finance, loans, and phone plans, just to name a few. A lender will also take a look at whether or not you consistently meet your monthly payments and if you tend to pay them in full. This can enable them to determine whether or not you are in a position to pay your monthly mortgage payments and protect themselves in the event that you default. If you are unfamiliar with your credit score, you should be able to access it free of charge online. By getting into the habit of doing so on a regular basis, you can monitor your spending and perfect your credit score over time.
5. Do your research
When it comes to any major milestone, you must do your research. This includes gauging the type of property and price point you should be able to afford as well as which geographical locations are likely to suit your individual lifestyle and budget. If you work remotely or if you have no problem relocating or transferring within your company, you should widen your horizons. If you are unable to give up your current position, on the other hand, you should focus on available properties within close proximity to your place of work.
If you are considering setting foot onto the property ladder, it may benefit you to find full-time employment, pay off any outstanding debt, save as much money as you can, perfect your credit score, and do your research.
