Tips to Qualify for Your First Mortgage
For many people, building a good credit score is a lengthy process all in aid of qualifying for their first mortgage. For those lucky enough to have already met the minimum criteria, maintaining and improving that good credit score is still important in order to get the best mortgage deal and lowest interest rates possible. There are a number of ways to help you qualify for your first mortgage, but the best advice to live by is to be sensible with money. Mortgage applications take into account more than just your credit score, so savings accounts and income are going to work in your favor if you have them in high amounts. Here are some of the lesser known tips for qualifying for your first mortgage:
Pay Rises over Bonuses
Mortgage applications are in-depth and detailed to the point of excess, during which the broker will analyze every facet of your financial life to calculate the risk you pose to the lender. Not only will they look at your household income and how likely you are to run into financial problems in the future, but they will also examine how it is that you earn your money. If you picked up $35,000 last year but $15,000 of it was in overtime shifts and bonuses; the broker will not treat your salary as $35,000. Flexible earning can change from year to year, so the broker has to calculate this into their estimations and judge you on the minimum you will earn. If you have a choice to opt for a pay rise rather than a bonus or commission structure, you would be wise to choose the raise.
Try to maintain an unbroken employment history throughout your early life, even if it means sticking at a job you hate. Mortgage brokers see gaps in employment as big red flags, they assume that it may happen again and you won’t be able to afford the repayments. When you begin to apply for the mortgage, you will be better served if you have been in the same job, company or position for two years or more. Even if you have no gaps, mortgage brokers like stability and they would prefer to see you in steady, settled employment.
Unorthodox Credit History
The myth that you can’t get a mortgage without a good credit history is not altogether true, though it has its roots in truth. You are far more likely to be approved for a mortgage with a good credit score and track record of making timely and full repayments. However, some mortgage brokers may accept alternative forms of credit history if you are young or have not had much credit experience, don’t be afraid to try. Arming yourself with the best possible weapons such as high savings accounts with records of frequent deposits, spotless documents of payments on utility bills and early rental settlements can all help you score a good mortgage if you have a little luck.