A mortgage is a loan that is taken out to cover the value of your home. You then have to pay it back with added interest. Lenders will want proof of your income and may want to know about your personal spending habits, including bills. They will also check if you have any unpaid debts or ongoing debts. Your credit rating is essential to getting a decent mortgage. According to the Guardian, Approvals dipped 1.2% to 68,315 last month from 69,114 in January” and blamed this on rising credit accumulation.
When assessing if you are ready to take out a mortgage you are going to need to monitor your spending. This includes knowing what money is coming in and out, what debts you have and also managing your savings. Each month is not going to be identical. Life likes to test us with car damages, surprise phone bills or an illness. This means you need to keep organised records.
You must keep a note of all your personal spending, keep receipts for reference and then decide where you can save some money. You can then see what free money you have left over to start paying off debts and ultimately see how likely you are to be able to take out a mortgage.
The key to saving and assessing your financial capabilities is by being organised. This means keeping your financial documents stored neatly and ordered so you can refer back at any point at ease. All you need is some simple document storage units such as some decent box files and a safe and secure place to store the information.
You will preferably need one that you can write a name onto. Simple organisation like this can save you a lot of money in the long run. You will then have a place to file your receipts, pay cheques, bills and debts. This will make it much easier to budget!
Budgeting it setting aside certain amounts of money each month to cover things like bills, food and travel expenditures. This will allow you to see how much money you can afford to save, allowing you to put down a bigger deposit on a house. It will also show you what you don’t need to be spending. So, for example if you are spending a lot of money per week on takeaways, you may decide to limit that to once a fortnight. That automatically saves money that you didn’t think you had.
When making the mortgage deal you will need to put down a deposit. So, for example, if the house you want is £200,000 and you put a £20,000 deposit (10%) on the house, you then have 90% left to pay. The lower the percentage left to pay, the better chance you have of getting a lower interest rate. That means you need a decent savings account. This is entirely why it is important to budget and organise all of this?
Overall, the less debt you have and the more money saved the better! By using simple financial tracking methods and organisation advice you know where you stand. It is then perfectly clear what you need to achieve to get the mortgage deal you want.
In the long run, even if you realise you can’t afford a mortgage at present, being organised and keeping track of your spending will untimely result if you improving your credit rating, which increases your chances of getting a mortgage in the future.