What Mortgage Can I Afford?
When it comes to being a first-time buyer, mortgage applications can seem like a confusing maze – if you’re unsure about what mortgage you can afford, you’re not the only one.
Banks and lenders take multiple factors into account when it comes to accepting your mortgage, so it’s important to have a rough idea about what mortgage it is that you can afford before making any decisions.
Here are some of the top factors which may affect what mortgage you can afford…
What Factors Can Impact a Mortgage?
1. Your Income
Of course, your income is going to play a massive part as to what mortgage you can afford. Having a stable, comfortable job that allows you to have money for expenses will show lenders that you’re highly likely to pay the mortgage back appropriately.
Job stability and having been with your company for a decent amount of time will create more reassurance that you won’t be in left without any employment, or in a financial situation where you won’t be able to afford paying the mortgage back.
Take into consideration your income, expenses and if your job is paying enough right now to be able to afford the mortgage you wish for.
It’s simple – a larger deposit, means a smaller mortgage as you have already secured a chunk of the mortgage and paid it off.
If you have a large sum saved and will be depositing a big amount of money, you are more likely to be able to afford your chosen mortgage.
3. Credit Score
Credit scores are a crucial part of applying for a mortgage – if you have a good credit score, it’ll show lenders that you are great at money management and will be a reliable borrower.
On the other side, if your credit score isn’t great, it may be harder to get a mortgage. That doesn’t mean it’s impossible – we have a whole blog on how to get a mortgage with a bad credit score!
There are plenty of banks that still give out mortgages with a poor credit score, but the chances are that payments will be larger and they may have a bigger interest rate.
4. Additional Applicants
If you’re a first time buyer, we know it can be tricky to save up for a house deposit, all while having a brilliantly paid job and great credit score, which is why it may be a better idea to look at applying for a mortgage with a partner, friend or family member you’d be comfortable sharing a home with.
Applying with another individual means that both of your incomes will be taken into consideration and so will your credit scores, therefore, if you partner with someone that has a decent income and score – it will boost the amount of money you can borrow for a mortgage and the chances of being accepted.
5. Lifestyle Adaptations
Your lifestyle is a large factor of what mortgage you can afford – skipping out on your favourite restaurants for a night in, or not buying the new range car that is out may be one step closer toward a better mortgage rate.
Having no new loans or credit agreements, including new cars/recent large purchases, will act in your favour when it comes to mortgage applications.
If you’d rather not make any adjustments to your current lifestyle, it may be better to consider lower pricings or applying with a partner.
Knowing exactly what mortgage you can afford is not an easy problem to solve, but we sure can give you advice on where to start.
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