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When getting on the property ladder, the vast majority of people will need to borrow money for a mortgage. This is a crucial stage of the process and it will have a significant impact on your finances for the foreseeable future – it is for this reason why you must always take your time to think about how much money to borrow and whether or not you will be able to afford the monthly repayments.
Lenders will cap the loan-to-income ratio at four-and-a-half times your income and they will also assess what level of monthly payments you will be able to afford by looking at your income and personal expenses – this is called affordability assessment. When working out how much you can afford, a lender will look at your income, outgoings and future changes which might make an impact such as having a baby, increased interest rates or you or your partner losing their job.
Considerations Before Borrowing
Before approaching a lender, there are a few things that you should do to put yourself in a better position. You will need to put down a substantial deposit so you should spend some time saving for this as well as take a few steps to improve your credit rating to increase the likelihood of getting approved and favourable rates. There are many ways that you can improve your credit rating, including getting on the electoral roll and closing down old accounts.
It can be difficult and stressful to take out a mortgage and it is a huge life decision. It is for this reason why it is always a smart move to speak to a specialist whether this is your first property or your fifth. Specialists like Andrews can help with the entire process and make sure that you are making the right decision for you by considering all of the different angles. This can take all of the stress out of borrowing money and help you to make an intelligent decision.
Buying a house should always be an exciting process as it will be the start of an exciting new chapter in your life. Unfortunately, often it is a process filled with stress and anxiety largely due to getting approved for a mortgage. The key is to be aware of your financial situation, to put yourself in a good position before approaching lenders and to always seek support to make sure that it is a smart move.
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