Property prices have bottomed out and interest rates are at historically low levels. Many people who have been sitting on the sidelines waiting for the right time to buy a home are beginning to consider a purchase more seriously.
While the economic conditions may be ripe for a purchase, you also need to consider your personal circumstances to establish whether you are ready for a mortgage commitment.
Are you carrying other debts? Do you have unpaid personal loans, credit card debt, or perhaps other debts that you are still repaying? Remember that any existing debt that you have will have an impact on the amount that you will be able to borrow in order to purchase a home.
We always suggest that you reduce your debts as much as you can before you take on the commitment of a mortgage.
How much deposit do you have? If you have full financials and a clean credit history you need to have at the minimum 5% deposit plus funds to cover purchasing costs. If you have some history of bad credit or you would need to make an application as a low doc borrower, then a larger deposit is needed.
Irrespective of how good a time to buy it is now, unless you have the required deposit, you will not be able to qualify for a home loan.
Deposit requirements depend on your personal circumstances as well as the type of property you wish to buy and its location. Some of the inner city apartments require the buyer to provide a larger deposit as do some more remote properties.
Run your income and obligation details through a “how much can i borrow ” calculator online. It will give you an estimate of what you could qualify for. Every lender has their own affordability calculator, so this will vary from lender to lender.
If you appear to not have sufficient income to take the loan today, unless you get someone to come with you on the loan as a guarantor or a purchaser you are probably best to wait until your income situation improves.
Remember that not all income is treated by lenders the same. If you are working in a cash industry can can not offer proof of income, qualifying for a loan may be difficult.
Borrowers who have had some recent credit history hick-ups, such us missed bills or arrears on their credit card statements are best to wait some months or maybe years before the bad credit event comes off their statements/credit report.
Unless you do that your loan may be more expensive or worse still be declined.