What you should know before taking a mortgage
Purchasing property is truly an exciting experience especially for first term buyers, but are we aware of some of the things that should be taken into consideration before a mortgage is sought?
Before taking a mortgage, ask yourself;
- What are my needs? Do I need house and land or can I purchase land only now and look to build at a later date?
- Am I currently in a financial position to comfortably make mortgage payments?
- Do I have a financial cushion for sudden difficulties (e.g losing one's job). Financial experts suggests that the cushion should be able to cover 6 months worth of expenses.
Having satisfied the above one should seek to;
- Clean up your credit. Too many credit cards, hire purchase accounts and loans especially those with high monthly payments will make it more difficult to qualify for a mortgage.
- Calculate how much you can actually afford to spend before starting the search process.
- Save the equivalent of 5-10% of the value of the property as a down payment. E.G if you are looking at properties in the range of $40,000 to $60,000 then you should save between $4,000 to $6,000. Most institutions will fund between 5-10% of the cost of a property, so be prepared to put in a contribution.
- Save additional cash to allow for closing charges, property insurance and other mortgage related cost.
The next step s pre-qualification. One of the most common mistakes made by persons seeking a mortgage is skipping this step. Without pre-approval there is no way of knowing what one would qualify for or can afford based on income.
Many persons especially those looking to build, draw up plans, get them approved, then approach a financial institution only to find out that they cannot afford it. This step would allow one to tailor their plans to suit their affordability and save time and costly changes to their plans.
REQUIREMENTS FOR PRE-QUALIFICATION
- Recent salary slip & job letter
- Information on any loans, HP or credit card accounts that you have- The balance and monthly payments.
- If you are considering a joint mortgage then the information would also need to be provided for the co- borrower.
Call -452-3464/3467/3468 or email SMFC@candw.lc to set up a pre-qualification appointment today.
