How Best to Determine if You can Really Afford to Get a Mortgage
Before making a decision to buy the property of your dreams, you need to think about some major factors that can have an effect on your decision. Although it’s the dream of many to have their own home, not all can realistically afford a mortgage. So how do you know if it’s feasible for you to get a mortgage? Here’s how best to determine if you can really afford to get a mortgage – and if lenders will actually give you one.
Figure it out
The first important thing you have to do is determine your whole income. How much do you earn per month? Do you have a stable income? Do you have other sources of income? Once you have figured out how much you earn every month, figure out your monthly expenses. How much do you spend on food, utilities, transport, entertainment, and so on? Make a list of your monthly expenses and subtract your expenses from your earnings. This will help you get a broader idea of how much you can pay every month for a mortgage.
How qualified are you?
The next aspect you have to determine is how ‘attractive’ you are to lenders. In other words, are you qualified? Lenders will assess your circumstances very carefully before they accept your application since it’s their responsibility to make sure that you can afford repayments. Typically, lenders will look at your earnings/income, your employment status, your monthly expenses or outgoings (and what you usually buy or pay for), your current debts, if any, and your financial responsibilities (e.g. children).
Other aspects which can affect your qualification
Lenders will also take a look at other aspects which can affect how qualified you are, as any mortgage expert from Mortgage Wise would tell you. This includes the following:
- Your history as a creditor. By assessing your history of credit, lenders can determine how much you have borrowed and how you have managed your debt prior to your mortgage application.
- Your deposit. The deposit you are able to save will make a big difference, since the more you have, the lower the lender’s risk. If your deposit is large, you are more likely to get approved – and you could benefit from lower rates of interest as well.
- Your age. The fact is that the older you are (and the closer you are to retiring), the lower your chances of getting a mortgage. You may need a larger amount of deposit as well.
Fortunately, there are certain kinds of mortgages which may not be as strict or stringent as others; all you have to do is look for those mortgage deals and get some good advice. Good luck!