Homeownership is something that millions of people in the UK aspire to – but it’s also something that’s out of reach, thanks to spiraling interest rates and a more general cost of living crisis.
While things are difficult right now, however, savers aren’t powerless to help themselves. Let’s take a look at a few winning strategies.
Pay off your debts
If you have other debts that need to be dealt with, then you might look into paying these off first. See if you can consolidate your debts into a single payment, and then make a plan for regularly paying it down.
Bear in mind that certain forms of debt, like student loan debt, isn’t really debt at all – and so shouldn’t be considered in the same way by would-be lenders. A regular savings account might help to optimize your savings, too.
Start Saving
When you want to buy property some money is needed in advance. In the majority of cases, this number is never below 5% and it is usually higher. The higher the better as far as you’re concerned if you have the money to put up in front.
If not, having to pay up to 95% of the mortgage will come with a very high-interest rate which doesn’t work in your favor. Mortgage works the best your way if you can pay up the majority up front. To be able to do this you need to have savings.
Clearing your debt is one thing. Having some money on the side is another. Depending on the entire value of the property this number can sometimes be very high.
When it comes to mortgages it is better to do this slowly. If you rush things you can put yourself in financial jeopardy. The best thing to do first is to start your savings account. Once you’re clear of debt, look where you can cut your expenses and try to go from there.
Cut on the cable TV, move to a smaller apartment, or simply save up on groceries and start shopping on discounts. Even the smallest of changes can lead to an increase in your savings. In the long run, this can play a vital role when you apply for a mortgage.
Speak to a mortgage adviser
If you don’t know anything about mortgages, then it might be a good idea to speak to someone who does. In many cases, a mortgage adviser will offer you their input for free – until you finally secure the property you’re looking for.
Get a secure job
The bad news for freelancers is that you’ll need to be able to demonstrate earning power over several years before your lender will assume the risk of lending to you.
If you’re in a salaried position, however, things tend to be that little bit easier: you can just provide a few payslips. In either case, it makes sense to make your career a priority. The more money you’re bringing in, the better your chances will be of getting a mortgage offer.
Monitor your credit score
Lenders don’t work in isolation. They talk to one another, sharing insight into members of the debt-paying public, and their ability to borrow and promptly repay the money. This information is expressed in the form of a single number, called your credit score.
There are three rating agencies in the UK, called Experian, Equifax, and TransUnion. This means three slightly different numbers. You have the legal right to check your credit score. In the UK, it’s free – and you might be able to boost your score instantaneously.
Buy with someone else
If you have a partner with whom you’re in a committed relationship, then you’ll be able to get your property for half as much. It’s a big step, so make sure that you are serious about the person you intend to live with. Backing out later can be expensive and stressful.
Talk to Parents
If you can do this, it’s great. Many of us get a mortgage to get out of our parent’s homes. But, being independent doesn’t mean you can ask them for help. Most parents love to push children towards the property of their own if the situation is right.
So, before you start exploring other options you’d be wiser to talk to your folks. They might be a lifeline you’re so desperately seeking. There are a few ways they can help you. First of all, they can lend you the money directly for the down payment.
This is the less risky way of getting up the property ladder. Another option is that they guarantee your payments with a property of their own. If you fail to pay, they will be responsible for it. Making this kind of a deal requires you to have the utmost trust in them and of course another way around.
Go for a cheap property
You might have your sights set on something hugely desirable – but if you want to improve your chances, and get on the ladder more quickly, then it makes sense to lower your expectations. If things go well, you can always climb the ladder later.
Keep It Real
In the end, what matters the most is that you remain realistic. Buying a home is one thing. Seeking a place that you can’t afford is another. You need to be aware of your possibilities and future opportunities.
Do not rush things in this department. If you borrow too much or rely on your parents plenty, you could end up in trouble and drag other people with you. This is why you need to buy what you can afford. If this is the case you won’t be missing payments, and everything will work out fine.
If you bite more than you can chew, having a mortgage can fast become a burden instead of a lifelong reward. Getting up this ladder is not an easy task. But, you know what? It’s doable. You can do it too.
