Easing the financial pressure of buying a home

Buying and owning a home is a huge milestone and should be an exciting time in anyone’s life. But no matter whether you’re a first time buyer or are moving up the property ladder, the process of buying a home can seem stressful. Coupled with the current cost of living crisis, many people will be feeling the effects of rising energy costs and household bills more than ever.

Brian Murphy, head of lending at Mortgage Advice Bureau, shares his top tips on how to ease the pressure of the buying process and ways to help reduce the strain on your finances.

1. Work out what you can afford and create a budget

With the cost of living increasing as it is, coupled with rising inflation, your money won’t quite stretch as far as it once did. Creating a budget based on your income and outgoings will help you to see any areas where you can potentially cut back on and make some savings. A budgeting calculator can be helpful in working out where your biggest costs are and where you could potentially cut back. If you’re looking to buy a house, also working out what your monthly repayments might be via a mortgage repayment calculator can help give you an idea of what you can afford. A mortgage adviser can also help you with budgeting and affordability – this will be the first thing they look at to ensure you can afford mortgage payments both now and in the future.

2. Explore locking in a fixed rate mortgage

If you already have a mortgage and are currently on lender revert rates or Standard Variable Rates (SVRs) you may want to consider locking in a fixed rate mortgage. This means that over a set time period, usually 2, 3, or 5 years, your mortgage payments will stay the same, giving you some ease that your rates won’t rise in that time. However, be aware of any fees and charges that some attractive deals have. The headline rates don’t always mean they’re the cheapest option. Speaking to a whole of market mortgage broker can help you explore the best options for your circumstances.

3. Sign up for loyalty cards

By getting your finances in order you will become more aware of your general spending habits and even the shops where you may spend the most money. This information can show you where you could take advantage of loyalty cards, rewarding you for your spending with loyalty points and vouchers. After a while you may find you have built quite a sum in loyalty points to redeem.

4. Get your documentation in order

For all mortgage applications, lenders need to verify your income to assess what you can or cannot afford before lending you money. This means providing various documentation to help evidence your financial position. This can include bank statements, proof of income, proof of address, or your latest utility bill. For those who are self-employed, some lenders may ask for further documentation, such as two or more years of certified accounts, tax calculations and tax year overview. Getting everything in order well in advance of your application will help smooth the process.

5. Get on the electoral roll

Being on the electoral register is more important than many may think when it comes to buying a property. Not being on it can impact future finance agreements such as a mortgage offer, lower your credit score, and prevent you from voting. One in five (19%) advisers cite this as a common reason for a mortgage delay, but it’s simple to do and can have a positive impact on your buying position.

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