When you’re trying to pay off debts, borrowing more money doesn’t seem like a sensible thing to do. Yet people will often tell you that getting a 0% interest credit card is an easy way to reduce payments. Borrowing can sometimes work, but if you […]
Tag: Debt Consolidation
When most people think about setting up their own business, they only ever imagine themselves in the driving seat. One thing that they don’t envisage, though, is just how much work goes into setting up a new company. There’s so much work that needs to […]
If you are currently in debt and want to get out of it, the first thing that you need is to work out why this has happened to you in the first place. You may well have already read through some of the most common causes of debt, but if you are not identifying with any of them, it may be that a commonly overlooked cause of the financial trouble is affecting you. This is what we are going to be talking about in this article, so let’s get started.
If your salary is not going up on a regular basis, you can easily find yourself slipping into debt simply because inflation causes the cost of living to rise year on year. This is why it is so important to have a household budget and keep it updated on a regular basis. This way, you can make any adjustments as needed to your spending habits so you don’t find yourself inadvertently slipping into debt.
Money is one of the hardest things in life for most adults to control. With unexpected bills, fees, and other expenditure, it can be almost impossible to make sure you’re saving enough to move forward in the future. Of course, a lot of people can […]
Individuals and couples often believe they can’t afford to spend money on a new family home. That is often true because their money management skills leave a lot to be desired. In many instances, people could achieve their dream if they just use some common […]
Buying your first home is one of the biggest and most exciting financial decisions of your life. It also requires a lot of research and preparation to ensure that you make the best monetary decision possible. Here are 4 important things to consider before you buy your first family home.
Is My Financial Position Secure?
The most important thing you can do before you buy your first home is to work on strengthening your financial position. To secure a home loan, you will need to demonstrate to the lender that you have the necessary savings and financial discipline to meet your mortgage repayments. If you currently have a few credit cards and a couple of personal loans, your level of debt might appear too high for some lenders. Work on trying to reduce or eliminate as much of your debt as possible before you apply for a home loan.
One of the simplest and easiest ways to do this is to consider debt consolidation loans. These work by combining all of your unsecured debt into one loan, allowing you to focus on one monthly repayment, often with a much lower interest rate than your existing loans.
How Important is a Good Credit Rating?
A good credit rating is essential, as it proves to your lender that you are capable of repaying your home loan. If you are buying your home with a partner, be aware that their credit rating will also affect the viability of your loan application. To improve your credit rating, focus on paying all of your bills on time, meeting your repayments, and eliminating your level of debt.
How Much is Enough for a Deposit?
It is recommended that you save between 5-20% of the value of your new home as a deposit. The benefit of saving up a good deposit is that you will pay less mortgage insurance the more you put down. Deposits that are 20% or more of the loan amount are free from paying the insurance at all, and can also allow lenders to be more flexible with other areas of your home loan application.
What About No Deposit Loans?
Generally speaking, these are nothing but bad news. If you’re already struggling with your finances and opt for a no deposit loan, you could be hit by cripplingly high interest rates that make it almost impossible to keep up with your repayments. You can also run the risk of owing far more than your property is worth. It is best to wait until you can afford to save at least 5% of your loan before buying your first home.
With careful preparation and planning, anybody can afford their first family home. Doing your research is essential, as is making sure that you are in a strong and secure financial position. Make sure you take the necessary steps to protect your credit rating for the greatest chance of success when applying for a loan. Always keep these important tips in mind, and you’ll find yourself in your dream home sooner than you think!
Written by Emma Jane