Getting yourself mortgage ready usually takes some planning and is not usually achieved overnight. And a key part of the process is being able to demonstrate that you can sustain repayments on the mortgage that you are looking for.
While your income will determine how much you can borrow, your monthly rent and savings are key to you showing the lender that you can afford the level of borrowing you are looking for.
We often come across two applications where the income level is the exact same. However, one will easily qualify for the mortgage as they have shown good affordability for it in the 6 months leading up to their application. However, the other application won’t qualify for the mortgage, as they haven’t shown enough consistency in how they save or how they pay their rent.
To become mortgage ready, follow these mortgage affordability tips
It is hugely important that you:
- Save at least 1.2x what your mortgage repayments are likely to be. This shows that the repayments are still affordable, even if interest rates increase in the future
- If your rent is equal to 1.2x the proposed mortgage repayments this will be fine. However, it is preferable if you can also demonstrate some level of monthly savings too
- Make sure that you pay your rent by bank transfer if you want all lenders to consider it
- You can save more some months if you have money leftover, but make sure you don’t save less than that predetermined set amount