The truth of the matter is that getting a mortgage is not easy, especially in this time when the market is more competitive, and lenders are stricter than ever. Acquiring the home or property of your dreams can be quite a challenge if you don’t have a very good idea of how to go about it in the proper way. For instance, before you even look for property, you should work out how you will pay the mortgage. This means working out how much you earn and how much you spend each month. Here’s how you can properly work out your income and expenses before applying for a mortgage.
Determining your income
Although the idea of having your own property is definitely attractive, one of your very first tasks would be to determine your income. You need to know how much you really make each month because this will help you determine how much you can pay for mortgage repayments after all your monthly expenses. Make a list of your earnings, including your actual salary (don’t forget to include overtime and bonuses), your benefits as well as tax credits, other income sources (such as a pension), money you receive for child support or maintenance, and income from savings, investments, other property, and shares.
Determining your expenses
Next, you need to determine how much you actually spend each month. This is trickier, because not many of us have a really good idea of how much we spend, as any Mortgage Wise specialist will confirm. This is where the details count.
Your monthly expenses should include the following: your rent or existing mortgage repayments, your credit card bill, any outstanding debts or existing overdrafts, the cost of child care, payments for child support or maintenance, school costs or fees, electricity, water, and gas bills; phone and Internet bills, TV subscriptions and licences, food and drinks, clothing, toiletries as well as cleaning products, pet expenses, council tax, insurance, payments for pension, payments for a student loan, petrol expenses as well as vehicle maintenance expenses, the cost of travel, and the like.
But as mentioned, there may be other expenses which you may not be completely mindful of. This would include expenses such as holiday expenses, social life expenses (such as going out to restaurants and bars), entertainment expenses (such as going to the cinema, sporting events, or watching concerts), membership expenses to gyms and health clubs, expenses such as alcohol and cigarettes, and luxury expenses (such as gifts).
Once you have worked all of these out, you will have a better idea of what kind of mortgage deal to opt for.