How Much Money Should You Have Saved Before Buying a House?
Banks and mortgage lenders generally recommend having at least 20% of your desired home costs saved before buying. Accounting and saving for fees encountered when buying a home is a great way to ensure you are fully and financially prepared to fund the purchase of a new home. Having a well-thought-out financial plan and saving as much money as you can will benefit the status of your finances after placing the required deposit on a property.
However, if you have a good bit of personal debt you should also work on minimizing the amount you owe. Debt can harm your potential of becoming approved for a home loan with great interest rates and lowered monthly mortgage repayments. Lenders will check home loan applicants’ credit scores and past financial statements to determine the overall risk of lending and an individual’s borrowing capacity. Paying down credit cards, lowering credit limits, eliminating high-interest debts, and cancelling unnecessary credit cards can help boost a low credit score while also increasing an applicant’s potential borrowing capacity.
Creating a mortgage repayment plan and starting to set aside money to fund those repayments can allow a home buyer to get a head start on paying off home loan debt and even speed along the repayment process.
When you are ready to begin your home-buying journey, reach out to our professional lending specialists at Mortgage House! We have successfully helped Aussies achieve their home buying and financial goals since 1986, and can assist borrowers with finding the best interest rates and planning for home loan debt repayments.