There are a few things that can be considered ‘important milestones’ in the life of every individual, and moving into your own apartment is definitely high on the list. It’s as difficult to achieve as it is significant because this kind of freedom often comes at a high cost. On the other hand, even if you find yourself facing obstacles that seem to be insurmountable, remember that there are useful tricks you can use to make a situation a bit better for you and even build a foundation for a more successful future.
See if you can afford it
First things first: as much as you want to get settled and to finally get your own place to live, you should ask yourself: can you actually afford it? A loan is not a simple thing, and unless you can afford to put aside at least 30% of your gross monthly income (that’s before taxes, mind you), you should give it a second thought. To put it simply, if you’re currently making $4,000 per month, unless you can put aside about $1,200, you should definitely reconsider it. It doesn’t matter if we’re talking about simple rent or a loan, you should be aware of the amount of money you’re willing to put aside for your apartment. If you’re currently working on your student loans as well, you should think about making a plan with a financial advisor, as there are more factors to consider. Retired individuals may work with a real estate agent to find senior apartments that are within their budget.
You don’t have to go to a bank
Back in the day, only traditional lenders were able to earn money from returns, but today the situation is different. The loan you can get doesn’t have to be connected to a bank, as there are plenty of individuals who are dealing with fixed interest investments these days. Banks have an approach which they use on everyone who applies for a loan, and it can easily happen that they refuse your loan. The marketplace lenders, on the other hand, have different criteria, and if you happen to have good credit behaviour, you might even get a lower interest rate on your loan. Banks can sometimes have rigid credit policies which can make it difficult for an individual to get a loan, but these days you can get a loan online, without even having to go to a bank. The Barclays bridging loans guide here can get you to apply for loans immediately and easily.
Pay attention to your credit history
Unless you have enough money in cash to pay for your new apartment, you should definitely consider your credit history. It doesn’t matter if you’re thinking about getting a loan from a bank or getting one from marketplace lenders, your credit history is very important. If you’ve been paying your bills on time, there shouldn’t be any problem, and you’ll likely find it easy to secure a car loan or even a mortgage. You don’t want your credit history to pose any problem, as everyone from landlords to banks will use a credit check to make sure they’re dealing with a responsible adult. They’ll likely peer at your credit history and to assess just how much of a financial risk you might pose for them.
Improve your income and savings balance
It can happen that you don’t actually have an established credit history, and even though it might make it a bit more difficult for you to get an apartment, it doesn’t make it completely impossible. You may still be approved for a loan in case you have a stable income and if you’re capable of covering the expenses every month. When you’re renting, it’s generally recommended that the expenses don’t exceed one-third of your take-home pay. High savings will allow you to cover several months without actually feeling like you’re struggling, which is why people with better savings balance find it easier to ‘grab’ good deals and better apartments.
Build credit by paying rent
There are cases when paying your rent on time will help you build better credit. There are even some major credit reporting agencies that are willing to include positive rent-payment history on your credit reports, but that is only in case they receive it. If you really want your positive rent payment history to be included on your credit reports, you have to talk to your landlord first. They must report your impeccable rental history data to the companies but you should remind them to do so as it’s not a standard practice these days. If you’re hoping to build good credit, you should make sure your landlord reports your regular payments, so the banks know just how responsible you are. Sadly you can’t self-report – it has to be another party, so talking openly to your landlord today will save you a lot of trouble in the future.
Consider the following
There are many things to consider when it comes to monthly payments, and you should double-check everything before you actually get a loan. The cost of water, gas, electricity and cable shouldn’t be ignored as these will be added to your loan payment. When looking for a place to buy, consider getting one that’s actually close to your office or to a university, as you can rent the place to a student later on. If your place is within a walking distance to your job you’re more likely to save a lot of money on gas or public transport. If you’re hoping to save some money, consider preparing your meals at home and not getting cable until you start making a bit more money. Of course, you can always get a roommate because they will help you with monthly bills too.
Getting an apartment without credit
In case you have a bad credit or you have no credit at all, finding a landlord willing to accept your rental application can prove to be rather tricky. To improve your chances of approval, you should get a cosigner or guarantor, anyone willing to agree to be held responsible for your future payments, in case you’re unable to make them. This is a big risk, of course, and it doesn’t come as a surprise that there aren’t many people willing to do it. On the other hand, if you show to your potential landlord that you’re willing to pay an extra month or two of rent upfront (sometimes paying a higher deposit is also a good idea), they might be able to overlook your bad or even nonexistent credit.
Moving to your first apartment is always a big deal as it symbolizes the beginning of your ‘adult’ stage in life: it’s a place that you actually own, not rent, and it’s a big step in anyone’s life. Getting there, on the other hand, can be tricky and people feel like getting a loan is often the most difficult part about buying an apartment. It doesn’t have to be the case if you take time and prepare well, read the fine print at the bottom of the page, and stay informed at all times.