If your New Year’s resolution for 2020 is to expand your real estate portfolio, here are a few tips to get your finances in shape for that life-changing purchase.
- Reduce personal debt. Prior to approving your mortgage, lenders consider your ability to make payments. If your debt-to-income ratio is close to, or higher than, 40 per cent, you should take steps to reduce it.
- Postpone large purchases. Access less credit and save more of your income. Start a home ownership savings plan today!
- Get to know all the costs involved in the mortgage process. You may need up to 25 per cent cash, up front, to cover the cost of fees such as: closing costs, escalation fees and legal costs.
- One practical step towards saving for the deposit includes preparing a budget and sticking to it. Avoid spending on non-essential items and impulse purchases, as this impacts negatively on your ability to save. Open a separate bank account, ideally a high-earning savings account and set up an automatic salary deduction and make top-ups when possible.
- Pre-approval is a critical first-step in the journey towards home-ownership. The pre-approval process looks at your total financial health – that is, your income against your total debt. This will tell you what you can afford to pay for a house.
Pre-approval is a service that is offered, at no charge, at JN Bank. The pre-approval process is quite simple. It entails providing your income details and outlining any existing debt you may have.
All you need to provide is:
- Valid government issued identification, such as a driver’s licence or passport
- Social insurance number
- proof of address
- income verification letter and last two payslips
- completed credit report forms and statement of affairs