In this week's Millennial Money episode I share 5 things you should check before you buy a home, from reviewing your credit score to checking that your passport is in date. If you are looking to buy a home for the first time you may wish to read our first-time buyer guide for all the information you need for buying a home for the first time.
5 things to consider before buying a home
1. Contact a mortgage broker
One of the best things to do first is to speak to a mortgage broker, which will allow you to find out how much you can borrow. This then allows you to see what is out there in the market within your budget. Knowing how much you can borrow can then help you to work out how much you can afford to pay each month, so then you’ll be able to break down what your monthly cost will be like and if buying a home at that price is something that you can comfortably afford. You can also find out what type of property is within your price range, and how much you may need to save up for your deposit, giving you a bit of guidance for how much you’ll need to be saving each month ahead of your purchase.
2. Review your credit score
You should be reviewing your credit score and regularly checking your credit report anyway, but it can be especially important before you buy a house, as it can help you to identify any faults or problems that may be on your credit file. It's important to remember that there is no single, universal credit score. Each credit reference agency creates its own score based on your credit report and its own set of criteria. There are three main credit reference agencies: TransUnion, Equifax and Experian. Each of these will create its own unique score so it's best to check what your credit score is with each one to get the best representation and see what's on your credit file. Each lender will have a different credit reference agency that they refer to, which is why it’s best to check with more than one and identify any key issues lenders may be looking for, such as any missed payments that could make you seem unreliable. For tips on checking and improving your credit score, read our articles '6 tips to improve your credit score' and 'How to check your credit score for free'.
3. Check that your passport is in date
This may be surprising, but an out of date passport could potentially cause some serious issues when applying for a mortgage, as lenders will need to cross-check your ID to ensure that you are who you say you are. If your passport is out of date, it will no longer be valid and you won’t be able to use it to verify your identity, so make sure to check the date and apply for a new one if you’re in need.
4. Is your current address is up to date?
Similarly to an out of date passport, an out of date address on your ID or bank statements could cause issues when applying for a mortgage. Make sure that all your personal details are correct and consistent across all of your paperwork to minimise any chance of hiccups or holdups.
5. Factor in the cost of buying a house
Arguably the most important thing that you need to do before you buy a property is to factor in the cost for all of the fees that come with buying a house. Obviously, when you're saving for a house, the key thing that most people think of is whether they have enough money saved up for a deposit but many often forget that there are a lot of additional fees that also come with purchasing a property, such as stamp duty, solicitor fees, valuation fees etc. All of these can mount up, particularly if you haven't accounted for them, so be sure to set enough money aside for that before you buy. For more information on how much you can expect to pay when you buy a house read our article, 'How much are the fees when buying a house?'