Financing Tips

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fb_3Buying a home will likely be one of the most biggest investment purchases you will make in your lifetime; and as such, it can require a long term mortgage financial commitment. In order to meet these ongoing costs and sustain the property you need to be in complete control of all aspects of your finances. Here are our key tips for retaining control of your financial situation and preparing for the unexpected. 

  • Get your credit score in the best possible shape.

Having an excellent credit score will make lenders much happier to loan to you and will get you access to the best mortgage rates available. There are many ways to improve your credit score, but a good start is by clearing any debts that you may have and ensuring that you consistently pay your bills on time.

 

  • Clear as much debt as possible.

Not only will this improve your credit score, but it will ensure that you have a greater amount of disposable income each month. This could be used towards saving for a down-payment for your new home, and the larger the down-payment you have the less you will have to borrow.

Mortgage lenders will also look more favorably on your application as they prefer your total monthly debts – including any mortgage payments – to be less than 43% of your income.

 

  • Don’t max out your mortgage offer unless absolutely necessary.

It can be extremely tempting to buy the absolute maximum amount of house that you can afford, but just because a lender may give you a mortgage of $300k does not necessarily mean you should take on a loan of this size. In face borrowing less can have a number of benefits.

Firstly, the less you borrow the less your monthly repayments are likely to be. This will give you the option of saving an emergency fund, and give you a little more disposable income for day to day living.

Secondly, smaller monthly repayments also allow you a little more flexibility should your circumstances change in the future, for example if your income reduces due to a change in job or because you return to study. Purchasing a smaller home usually means lower property taxes and utility bills too, saving you even more.

 

  • Keep on top of any maintenance.

By undertaking any small and inexpensive jobs as and when they arise you can prevent them from becoming costly and time-consuming. However, do not attempt to do any significant repairs that you are not sufficiently qualified or experienced to undertake. Certain aspects of maintenance, such as electrics, can have numerous health and safety concerns that are not only dangerous, but can compromise the whole property if not carried out properly. 

  • Keep receipts for any home improvements.

These can be used to increase your homes basis and maximise your tax free earnings on when you come to selling it. 

  • Get some assistance on your tax return.

Owning a property can alter your tax situation and the deductions that you may be eligible to claim. By hiring an accountant to do your first couple of tax returns you will have a useful template that you can use to do your own in the future.

 

  • Hold off on the personalization.

Although it is understandable to want to stamp your personal style on a new home in order to make it your own, it can be another large financial drain trying to change everything at once. You also run the risk of being tempted by borrowing to do so, putting you into debt and creating another financial obligation to fill. Instead only make smaller and inexpensive changes whilst you get to grips with the usual month to month costs of home ownership.

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