If you’re in the process of looking for a home and have found one that’s perfect for you, it can often be difficult to know whether you could borrow what you need or what your monthly mortgage payments might look like. This uncertainty can make it harder to take the next step with confidence, especially when you’re eager not to miss out on a property you love.
In our recent blog, we take a look at some of the key things to consider when assessing what you can afford and how to move forward with confidence.
Consider your budget
One of the first things to review is your budget. How much can you afford in terms of your deposit, monthly repayments and additional costs? Is your ideal property realistic based on your income?
Check how much you could borrow
Online mortgage calculators can be a useful starting point, but they don’t reflect your full financial position. In reality, how much you can borrow depends on a range of factors, including your income, outgoings and credit profile, with some lenders also taking bonuses, overtime or other income into account. Getting independent advice can help you understand what you may realistically be able to borrow.
Understand your monthly repayments
Calculating your monthly repayments will help you budget effectively and understand what you can realistically afford. It’s also important to factor in additional ongoing costs alongside your mortgage, such as home insurance and general household bills.
Interest rate awareness
It’s important to be aware of current interest rates, as these will directly impact your monthly mortgage repayments. Even small changes in rates can make a difference to what you can afford, so keeping this in mind when assessing your budget can help you make more informed decisions and avoid overstretching financially.
Review your income and outgoings
It is important to review your current list of outgoings such as car payments, student loan and other financial agreements. That way, both you and your lender can assess your affordability.
Think about your deposit
How much deposit are you willing to put down? Putting down a larger deposit means you will need to borrow less money, which could result in more favourable mortgage terms and lower monthly repayments. However, it’s important to make sure that doing so doesn’t leave you short of savings for other costs, such as moving expenses, furnishings, or unexpected outgoings.
Factor in additional costs (e.g. legal fees, stamp duty, surveys)
When considering your budget, it is important to factor in any additional costs. Legal fees can often be a significant expense, and stamp duty may also be payable if the property is not your first home. Finally, it is important to consider the cost of surveys, which help identify any potential issues with the property before you commit to the purchase.
Check your credit profile
Your credit profile is something that is considered highly by mortgage lenders. Ensure any outstanding debts such as credit card balances are paid off as this can improve your credit score and demonstrate to lenders that you manage your finances responsibly. It’s also important to make all repayments on time and avoid taking on any new credit commitments in the lead-up to your application, as even small changes to your credit profile can impact a lender’s decision.
Consider getting a Decision in Principle
Getting a Decision in Principle will assist you when up against others who are looking at the same property, as it shows sellers and estate agents that you’ve already taken steps to secure finance and are a serious, credible buyer.
Next steps
Once you’ve found a property you’re interested in, the next step is to evaluate what you can afford. This means reviewing your budget and monthly outgoings, understanding how much you may be able to borrow, and factoring in additional costs such as legal fees, surveys and moving expenses. Taking the time to get a clear picture of your finances will help you move forward with confidence when the right opportunity comes along.
How we can help
Getting professional advice can make the process much clearer and ensure you’re making decisions that are right for your current circumstances and longer-term goals. At PM+M, our expert mortgage adviser, Mark Chadwick, can support you in understanding what you could afford and recommend suitable mortgage options.
Contact Mark using the button below.
PM&M Mortgages Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
