How your financial situation impacts home buying
If you’re buying your first home, your financial situation can make all the difference between you securing your dream home or missing out on the opportunity to get onto the property ladder.
1. How much you have saved
If you are looking to buy off-plan, here are some things to ask yourself first:
2. Your employment
If you are looking to buy off-plan, here are some things to ask yourself first:
- Buying your first home is an investment, no question about it.
- The average UK house deposit amount is in a previous guide (£10,815) and is often something new buyers will pay for from their savings.
Your employment status – and ultimately how reliable your stream of income is – can be a deciding factor in your approval for mortgages and favourable interest rates.
Lenders prefer borrowers who have steady, full-time employment since it gives them more confidence that they can make their payments on schedule.
If you’re self-employed you may have to show more evidence of your income (ideally at least 12 months of payments) and if you’re part time you may need to provide more evidence of your additional income to supplement the payments if needed.
3. Your credit history
Alongside your savings and employment, mortgage providers will also look at your credit history to get a more detailed picture of how stable you are financially.
According to credit agency Equifax, they may look at the following:
- Any debt you have and whether you’re paying this back
- Any missed payments on bills or existing debts
- If you have any CCJs on your record
- If you’re linked financially to anyone else and the effect their credit rating subsequently has on yours
- If a lender feels you have a ‘bad credit history’ it can limit your chances to be approved for a mortgage and/or determine how high the interest rates will be on the mortgage you get offered. However, some lenders handle applications on a case-by-case basis, so getting a first-time buyer mortgage with bad credit isn't impossible.
If you are concerned that you do have bad or poor credit, the Money Helper recommend trying the following to give your rating a boost:
- Register on the electoral roll
- Correct any mistakes on your credit file – you can find out more about how to do this in this guide from Uswitch.
- Pay off your debts
- Pay your bills on time
- Keep your credit utilisation low
4. Seller’s approval
In some cases, the seller of the property – be it a developer or on the open market – may also want to know more about your financial circumstances.
At Tilia Homes, we ask all our potential customers be qualified by The New Homes Group, so both parties get a clear understanding of your financial situation and we can provide better guidance on the right home for you. You can of course proceed with The New Homes Group or use a mortgage provider of your choice.
While a seller’s analysis of your finances won’t be as forensic as a mortgage provider, they may also want to know about things like your employment status and whether or not you’ll be able to afford the initial deposit.
5. Make sure you’re financially secure
It goes without saying that purchasing your first house is an exciting investment. With this in mind, it's crucial to ensure your financial stability before you begin looking for a home.
Our knowledgeable sales teams are here to answer any queries you may have regarding your finances when purchasing a property. They can also advise on options like shared ownership, as well as handling any enquiries on our quality new-build developments.
While a seller’s analysis of your finances won’t be as forensic as a mortgage provider, they may also want to know about things like your employment status and whether or not you’ll be able to afford the initial deposit.
To get in touch, find our contact information here. You can also find out more information about what additional support is available to first time buyers.