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Are your finances in shape? Getting mortgage fit in 2019

Being mortgage fit is about being in the best possible financial shape for when you put yourself and your finances in front of a potential lender of money towards the purchase of a property.

Mortgage lenders are looking for a number of signals that give them confidence that taking the risk of lending a significant sum of money to you has the best chance of being appropriate for all concerned. They will be looking to make sure you are well-placed to meet those regular payments, from an affordability point of view. Does your credit history and financial track record suggest that you're likely to be able to pay back the monthly payments? How have you handled credit in the past, if at all? As daunting as this assessment may seem, there are a number of things you can do to ensure you are in peak financial health and L&C’s Associate Director, David Hollingworth is on hand to ensure you are mortgage fit.

 

What does being mortgage fit mean?

I think you can look at this in two different ways. Primarily, being mortgage fit is about being in the best possible shape you can be to qualify for and obtain a mortgage in the first place. Being well prepared will help you to make a successful mortgage application and get things right first time. Secondly, being mortgage fit is about getting the right mortgage deal for you – perhaps in conjunction with the right scheme to get you moving. When you come to get the mortgage, it’s vital for future financial health you make sure you're getting the right deal. It's a big commitment, so make sure you get advice on the right product when you do get on the ladder.

It's about being proactive to make yourself look as financially attractive and stable for a potential lender

Firstly, it will help ensure that everything is going to run smoothly and give you the best choice of mortgage deal that you can attain. Secondly, it will improve your understanding and make you aware of how much you might be able to borrow. Affordability calculations will vary from lender to lender, but they will ask not only what your income is but also what your outgoings look like, including committed expenditure as well as other forms of credit like car finance, loans and credit cards. Evidence of payslips and bank statements will be required to prove your income and outgoings.

What are the benefits of being mortgage fit?

Knowing your financial standing will only help you when you're looking at property and trying to understand whether you're looking at the right type of property, at the right kind of price. It might be the property you want, but is it affordable and achievable from a mortgage point of view? It will help you to prepare from that point of view.

Digging deeper into your disposable income.

Understanding what you already spend on utilities, travel costs, childcare and other regular outgoings makes sense as all those things are factored into a financial assessment for a mortgage. Therefore, going through a budget planning process is an important thing to do to make sure you are mortgage fit.

It’s a great time to review your personal finances and spending habits, with opportunity to strip out extraneous costs in advance. You may uncover Direct Debits that are no longer as vital. The classic example is the unused gym membership or magazine subscription. Cutting those costs out will only help you build your deposit and healthy finance habits.

Why is getting mortgage fit good practice beyond securing a deposit?

Being mortgage fit is a good opportunity to get in the habit of regularly saving an amount ready for when the mortgage payments kick in. To extend the fitness analogy, it's like developing muscle memory.

A lot of first-time buyers will have a real challenge with getting the deposit together. They're used to trying to squirrel funds away towards their deposit and towards all the other costs of buying a home, but you need some cash behind you to fall back on, and you're going to have to prepare for how you deal with not only meeting monthly mortgage payments but also the other costs of home ownership.

Is a mortgage adviser like a personal trainer for my finances?

A mortgage adviser will be able to help you get fit in terms of advising you on how to attain the very best deal possible for your circumstances.  This can help save you time, money and heartache when you make your mortgage application.  Advice will help you understand whether you're going to get the mortgage in the first place, but also help ensure that you've got the most appropriate deal and therefore manageable monthly payments and once you do go ahead, they'll not only take you through the application but also help manage the mortgage process through to completion. All this could save you much money in the long run. Mortgages are often going to be someone's single biggest outgoing, so getting the right deal is crucial.

Proving your mortgage fitness gives a lender confidence

Ultimately, a lender wants confidence that the financial risk to both of you is minimal. Understanding the detail of your income and outgoings presents the most accurate and individual picture possible to make sure that the mortgage will be affordable now and in the future.

 

Recommended Reading: 10 Tips to get Mortgage Fit

 
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