Owning a home is a milestone that many people aspire to. Despite some potential challenges, it is possible to own a home in your 20s. Here’s a guide on how to secure a mortgage in your 20s:
1. Build a strong credit score
The first thing you’ll want to do is establish a good credit score. You can do this easily by just paying bills on time and avoiding debt. A pro tip you might want to consider is using a credit card for your monthly purchases and then paying it off at the end of the month to build your credit score. The higher your credit score, the more likely you are to be accepted for better mortgage rates.
2. Save for a deposit
Saving for a down payment is a crucial step. 20% is generally the standard, but some lenders will offer different options. We’d suggest setting up a dedicated savings account and adding to it every pay cycle, consistently. Bear in mind that if you cannot provide a 20% deposit, then a guarantee from a family member who already owns a property could help you in getting the approval.
3. Assess your financial situation
Lenders use information such as your income, expenses, and existing debts to determine the mortgage amount you can comfortably afford. Give yourself a head start by evaluating this beforehand.
4. Get pre-approved
It would be ideal if you could get pre-approved from a lender before house-hunting. This will give you a clear budget and also show sellers that you’re a serious buyer.
5. Choose the right mortgage
Before committing to anything, research and understand the different mortgage options that are out there. Explore and select the one that best aligns with your financial goals and your risk tolerance.
6. Ensure you have all necessary documentation to hand
Lenders require a lot of documentation – bank statements, tax returns, wage slips… Having these ready will speed up the approval process for you.
7. Choose and work with a real estate agent
By choosing a knowledgeable estate agent, they will be able to guide you through the home-buying process, making the complicated procedure a little easier. They will be able to help you find properties that are within your budget.
8. Stick to a budget
It can be tempting to stretch your budget for the largest home you can afford, but it’s important to stick to what you can comfortably afford to avoid any financial difficulties further down the line.
If you’re looking to apply for a mortgage loan, get in touch with us today.