Depending on the situation a house deposit can be the biggest single outlay of cash anyone ever makes. The reality of this means you need to think long and hard before parting with the bulk of your savings.
It’s worth considering just how much you can save to put towards your deposit as even though options start at 5% mortgage rates can become much more competitive from 10% and 15% onwards.
To help with this you could check out Money Saving Expert’s mortgage calculator and also take a look at the Government’s Help to Buy ISA which was launched specifically for first time buyers in 2015.
Your Credit History
A healthy credit history and score is essential when buying any house. Due to financial mismanagement pre-2007 credit scores have become even more important and the reality now is that a poor score will result in instant mortgage rejections.
There are plenty of ways to boost and manage your credit history including ensuring you’re registered to vote, pay utilities and bills on time and ensure addresses and records are up to date.
This is a long term project so don’t worry. Put best practices in place and check your rating before any application to avoid shock and disappointment.
Proof of Income
The proof of income topic can easily be split down the middle with salaried or hourly wage earners on one side and self-employed on the other. If you’re an employee your two or three most recent wage slips, with yearly earnings visible, will generally be enough.
If you’re self-employed you’ll have to work a little harder to prove your income. This will include 2 years of accounts, having an accountant, proving a track record of regular work, providing a good deposit and having a healthy credit rating.
Although your property deposit might seem like the most important element of any deal, due to the large cash outlay, the reality is you need to focus more on your monthly mortgage payments.
Here, it is absolutely crucial that you agree to what you can afford today, rather than project potential earnings in the future onto this deal.
It is also recommended that you organise your mortgage deal, and have it in place, before searching for properties. As a result you will be able to move quickly and efficiently when everything is sorted. It should be noted that mortgage deals generally last for up to 6 months in principle and if that time has passed you would be advised to research incase better deals have become available.
The Backup Plan
The final consideration should be your backup plan. If you secure a mortgage and then, at a later date, unfortunately lose your job or ability to earn you will need to ensure you can still fulfil your monthly payments.
This can come in a variety of shapes and sizes but generally boils down to what your partner can provide financially (unless you’re buying alone) or what savings you have stowed away for a rainy day.
Good luck with your property search in 2017 and beyond! If you have specific questions or want to learn more about the property market in Northern Ireland join us at the next Belfast Property Meet or click here to contact us today.