What Should You Consider Before Getting a Mortgage? [Ultimate Guide]

If you’re planning on buying a house, there are a couple of points to consider before taking out a mortgage. Some of them include your credit score, how stable your job is, and whether you have enough for a security deposit. Keep reading if you want to know what the rest are.

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1. Your Credit Score

Your credit score would tell lenders whether you are a reliable borrower. High credit scores are the best, if you’re not aware.

Your credit score would affect how much interest you’ll have to pay, and if it’s really low, whether your mortgage application would be accepted too.

The only way to improve your score would be to pay any debts that you may have. Request a credit sheet from your local credit bureau and then work on improving your score before applying for the mortgage.

2. Have Enough for a Security Deposit

You will have to pay a 20% security deposit on the home. Most banks won’t lend to you unless you show that you can make this payment. If you want, you can take another loan to cover it, or tap into your savings. We’d recommend going the latter route. You won’t have an additional debt to worry about.

3. Salary

Even if you can buy a house, it might not be a good idea if your salary isn’t big enough to pay the mortgage and also comfortably let you pay your bills and spend on expenses. Also, the amount you make will play a role in how much you will be able to borrow.

4. Job Stability

Don’t buy a house if you don’t have the most stable job. You might lose your home and end up in-debt otherwise.

If you’re taking out a joint-mortgage with your partner, you don’t have to worry about this too much. They might have a stable job, which would help if you don’t.

5. Work with a Mortgage Broker

There are probably hundreds of lenders that you can borrow from. To make sure you get the best rates, you can work with a mortgage broker. You won’t have to pay the broker anything – the lender pays them a commission.

Depending on your city, you might be lucky. If you’re looking for mortgage brokers Melbourne and Perth have some of the best.

6. Loan Period

Taking out a mortgage that you can pay back in a decade or two might sound tempting, as your monthly installments won’t be too much. But you would have to keep worrying about making the payments for years. Ideally, you would go for installments that finish up in around 5.

Final Thoughts

Considering all of the points that were discussed, what do you think? There are several tips and tricks to consider when taking out a home-loan. One of the most important points to consider would be your credit score. You need as high of a score as possible when taking out any sort of loan. You might be hit with high interested rates, or be rejected.