Most home buyers need to apply for and take out a mortgage to purchase their first property. The process of getting a mortgage can be complex and daunting, especially for first-time buyers. Fortunately, there are several ways to make the experience easier and ensure that everything runs smoothly. On that note, here is a guide to getting your first mortgage.
Start Saving Your Down Payment Early
You will need to be able to make a down payment on your property before you are approved for a mortgage. The total amount you will be required to pay will depend on factors including the value of your property and the terms of your mortgage. You will typically need to have a down payment that is 20% of the value of your home. So, if the house you want to purchase is valued at $200,000 then you will need to save a $40,000 down payment. Keep in mind that there will also be additional costs such as legal fees. You should create a savings plan and start putting money towards your down payment as early as possible. For example, transfer $1,000 into a savings account each month. This will motivate you to build your savings and make smarter spending decisions. You can use an online down payment calculator to work out how much you will need to save.
Compare Different Mortgage Lenders
There are many different lenders offering mortgages to first-time buyers. You must take the time to compare different mortgage providers and find a lender that suits your needs and preferences. Most first-time buyers apply for a conventional loan through a bank. However, you can also apply for a first time mortgage through a private lender like diversefunding.com.au. Make sure that you explore the different options and check things like interest rates and terms of the mortgage.
Improve Your Credit Rating
Your credit score will be used to decide whether or not you are approved for a mortgage. It is unlikely that you will qualify for a mortgage if you have a poor credit history i.e. evidence of missed or late repayments. Your credit rating will also affect what interest rate you are offered. For that reason, you should regularly check your credit score and take steps to improve your rating before applying for a mortgage. According to Experian, you can improve your credit score by paying your bills on time, taking out a credit card, and resolving any inaccuracies on your credit reports. Boosting your credit rating will put you in a stronger position when applying for a mortgage.
Explore First-Time Buyer Support Programs
There are various support programs in place to help first-time buyers get on the property ladder. For example, the Federal Housing Administration (FHA) insures mortgages to help first-time buyers afford down payments. People from low-income backgrounds can also apply for homeownership vouchers to put towards their first home. Make sure that you research what financial aid is available and apply for any support that could help you afford your first property.