What’s The One Change You Will Make In 2022

As mortgage advisers we talk to first home buyers all the time about making a smarter start and with this we see the struggles that many people have too.

Sometimes people are so close to being able to buy their first home, and it may be something small that means that they cannot make that step onto the property ladder. Other times people may be a long way off being able to.

Regardless where on the journey you are, if you are serious about buying your first home then you need to (a) establish where you are now, and (b) know what you need to do.

Where Are You Now?

The main thing that holds back people from buying their first home is getting the finance approved.

It may be due to having a lower than desired deposit, not quite enough income, too much ‘other’ debt or some account conduct issues. Or it may be a number of other things too.

Some of these things can be fixed quite quickly or an adviser may have some suggestions to get around them; however some things will need time.

The first thing that you should do is have an adviser do an assessment for you, and the mortgage advisers at Mortgage Managers offer this service for you at no charge.

Know What You Need To Do

Now is the time to commit to the change you will make in 2022.

Once you have worked out where you are now, you will know what you can work on to improve your chances of getting the first home loan needed.

There may be one obvious thing that will make all the difference, or it may be that there are a range things that need work. In most cases there will be one area that needs more work.

Some of the common things that need to be worked on are;

Deposit – most first home buyers would benefit from a larger deposit, and that generally means more time saving. There are some other ways to get a larger deposit and at times you might benefit from starting with a lower deposit, getting a second mortgage or looking at co-ownership as a way top buy a home with a lower deposit.

Income – in many cases younger people may be told that their income is too low. The key here is to know what income you need and if there are some debts or expenses that can be adjusted to lower the level of income required. The other issue with income is ensuring that the banks (or other lenders) will allow the specific income in their affordability calculation. Often there may be commissions, overtime, bonuses etc that are not guaranteed and therefore the lenders exclude it. If you are serious about getting a first home then you may want to consider some extra work or a side hustle which help with that extra income, but also will give you extra money for the deposit or to pay off some of those other debts.

Other Debt – people will often have credit cards, hire purchase, personal loans and student loans. Some people will tell you that these should be paid off before you apply for a home loan, but that may not always be the first priority. The perfect scenario is having no other debt, but if you already have debt then it’s a matter of assessing what might be the best way to manage an application with the debt included. It can mean having a debt repayment plan to work on or consolidating the debts into a lower cost loan.

Account Conduct & Bad Credit – the banks are looking more closely at these things now. If there is bad credit showing on your credit check then it can cause banks to say “no” regardless how good everything else might be, but some of the non-bank lenders treat this differently and it doesn’t mean that you cannot get a mortgage. The other thing is account conduct and that’s easier to fix as the lenders will typically just want to see 3-months bank statements.

Start With The One Change You Will Make For 2022

It can be overwhelming and some people will give up because there seems too much that needs to be done, and for this reason it is best to have a clear focus on just one thing.

The one change that really makes the most difference is the extra income.

Extra income can help in many areas – of course it helps with having extra income for when the lenders look at affordability but it also gives you more money to put into savings for the deposit, and to help pay off any other debts.

Now is the time to commit to the change you will make in 2022.