20-20 sure has a nice ring to it – a leap year; the start of a new decade and a promising year for pun-lovers. Heard the phrase ‘hindsight is 20-20’? Dry joke, I know!
Could it also be the year you get your dream home? To help make that a possibility, we’ve compiled a list of 10 New Year resolutions to help you buy your home in 2020.
1. Get serious about saving
The biggest hurdle for most home buyers is how to raise the 10%-20% deposit. It’s hard, absolutely! But fortunately, not impossible. First, you need to get into a habit of saving- there are bank accounts like Monzo’s that help you cultivate the savings habit and also a number of savings accounts that pay you a small interest for your savings. Secondly; don’t forget also that there are schemes available to support you in getting that home deposit quicker. From Lifetime ISAs, to Help to Buy, Shared Ownership, Rent-to-Buy and low deposit mortgage accounts. It’s time to get serious with your savings plan.
2. Decide on a location
The quicker you decide on the location you want to buy in, the quicker you can find your dream property. Spend time deciding on a short list of the top 3 locations you want to live in, using criteria like affordability, transport links, schools, etc. There’s little point trying to search for homes in a dozen different locations. Best to settle on 2 or 3 locations and get to know these areas very well. Set up alerts with portals like Rightmove and Zoopla to know when properties matching your criteria comes up and arrange viewings (even before you feel ready to buy). There’s a surge of inspiration that comes from viewing properties you’d like to buy even before you feel ready to buy! Think of it as window shopping.
3. Avoid large purchases
Prior to buying a home is perhaps not the best time to splash on that new car, change the furniture or max out the credit card. A large purchase could significantly deplete the cash reserves you need for your mortgage deposit but could also negatively impact your credit score if you’re purchasing using a credit card. Large purchases just before applying for a mortgage may also make you look less financial responsible to lenders and brokers, especially if you can’t raise the purchase deposit.
4. Watch the bank statement
Most lenders will ask to see 3-6 months bank statements before approving a mortgage loan so make sure your bank statement is in order. Try and avoid going overdrawn 3-6 months before you apply for a mortgage; make sure there are no missed or late payment charges on your bank statements; and it’s a good idea to keep your savings in your main bank account. Lenders like to see a steady rise in your cash balance from month to month so no harm giving them what they want to see.
5. Fix your credit score
Almost every lending decision is linked to your credit history and score. If you don’t have a perfect credit score, all hope is not lost. There are a number of simple improvements you can make in 2020 to get you on the right trajectory from checking your credit file to having your rent recorded on your file. We’ve compiled a 10-step guide to improving your credit score that you might want to read here.
6. Get pre-approved
It’s a good idea to get pre-approved early. Most people start talking to mortgage brokers about 2-3 months ahead of when they want to buy and you can take advantage of MortgageLadder’s free purchase-readiness service, to give you an idea of your purchase-readiness early on. Having an agreement-in-principle letter from a lender signals to estate agents and sellers that you’re a serious buyer and can be the difference between you and another bidder on your dream home.
7. Don’t apply for new loans
You should avoid making any credit applications 6 months prior to applying for a mortgage. New credit applications can reduce your credit score; but also increases your credit exposure in the eyes of a potential mortgage lender. So if you can, delay any new loan until after your mortgage approval.
8. Research what’s available to you
Research everything – available mortgage offers; compare brokers; get to your location; find out what first time buyer help programmes you’re eligible for; etc. A home is probably your biggest financial investment so make sure you get the best deal for your buck. Ask for the best interest rate in the market or the best loan-to-value (the higher the loan to value, the lower the deposit you need to put down). Get a second opinion and use price comparison sites where you can. Every little helps!
9. Get your documents in order
Sadly, applying for a home loan is far from exciting. You’ll need to provide loads of documentation and paperwork – proof of employment, proof of income, proof of address and every other thing to proof that you’re you… you get the picture! So best to start early, create a folder for everything you’ll need so you have them all handy when you’re good to go.
10. Don’t be afraid to ask for help
As they say, if you don’t ask, you don’t get! Don’t be afraid to ask the ‘Bank of mum and dad’; or ‘uncle and aunt’ for help if you’re lucky enough to have family and friends that can help. Besides asking for money, the process of buying a home is complex but fortunately, there are millions of people who have done it, meaning there are tonnes of information out there to help you navigate the complexities. Join online homebuyer’s communities like https://www.facebook.com/groups/TheBuyersClubbyRenterBuyer/ to get useful tips, connect with other homebuyers and also to share your stories. Sharing is caring!
11. Sign up to MortgageLadder
You deserve a little bonus, so we’ve added an 11th point to our 10-point list.
If you haven’t already signed up to MortgageLadder, what planet are you on! 🙂
In 2020, we’re launching our free digital coaching app to help you navigate all the complexities above; a free purchase-readiness review service and we’re also giving our community an opportunity to be part of our success in a crowdfunding raise. Plus, lots more interesting things to help you. So do sign up and kindly help spread the word to your family and friends. We all need every support we can get.
Happy New Year!