Preparing to buy your first home – Part 3: Reduce the debt

Here are some more tips for first home buyers to help make it easier to get a mortgage.

Debts make it harder to get a loan so here some things you can do to reduce debt:

  1. Reduce the credit card limits – banks count credit card limits rather than balances as an expense, so reduce the limit down as far as you can to make it look better.

  2. Close any cards you don’t need – if you have a random store card (Q card, Farmers card etc), close it off as it looks better without it.

  3. Close any overdrafts you don’t need.

  4. If your debts are nearly paid off, pay them off (if this does not drop you below the deposit you need).

  5. Unless your Student loan is nearly paid off, don’t worry about it. The balance is not what they look at, the existence of the debt is.

Keep an eye out for other tips from the DUX team, and if there is a tip you would like us to cover, get in touch.

 
Alan Borthwick