Getting Your Finances In Order To Purchase A Property

Purchasing a home is a big decision and one that requires considerable planning and preparation.

When applying for a mortgage, it’s imperative that you already have your finances in order, as doing so will demonstrate you’re responsible with money and will be able to afford your monthly payment for years to come.

To get you started, we’ve offered some useful advice on ways to organise your finances that will put you in the strongest position going into buying a home.

Understand the costs involved

While you don’t want to get your heart set on a property only to lose it soon after, it’s good to get an idea of the house prices in your area of choice. For example, you may prefer a new-build home in a quiet area or a terraced property in a town centre. You must also consider other costs involved in the process, including legal fees, survey costs, and stamp duty.

Use this time to research the different types of mortgages available across a number of lenders. Finding a good interest rate is essential as this will determine how much extra you will pay over the lifetime of the mortgage. Do note, that these will likely change, so be sure to keep up to date regarding interest rates.

Build your deposit

Now you’ve worked out roughly how much you need to save, it’s time to get your deposit together. Perhaps you already have a good chunk set aside or you have family helping you with your purchase. If not, you’ll have to start setting yourself some financial goals and finding ways to cut back on unnecessary expenses.

A good way to manage this is to work out your income and write down all your typical spends over the month. Decide what could realistically be reduced from these to calculate your overall savings. From this, you can then see what sort of timeline will be needed to reach your goal.

Other great ways to start saving include opening a Lifetime ISA, which is a government-backed scheme intended to help first-time buyers, or a high-interest savings account. The earlier you start saving, the better, even if this is just small to begin with.

Improve your credit score

If you require a mortgage to be able to buy, you’ll need to ensure your credit file is all in check. Lenders will use your credit score to assess your reliability as a lender. Just because you have a deposit at the ready doesn’t necessarily mean you’ll be able to keep up with repayments in the future.

Should your score require improving, it’s essential you make efforts to do so before applying for a mortgage, since this could negatively affect it further. Things such as paying off debts, using credit cards responsibly, and fixing errors in your credit report, can all work towards improving your score.