Getting a mortgage is one of the biggest financial commitments you’re likely to ever make. There are lots of things you can do to ensure you can secure a mortgage.
Here are some tips that may help to improve your eligibility and chances of getting your mortgage accepted.
Your credit score
Before applying for a mortgage, request a copy of your credit report through “checkmyfile”. This provides you with information on what lenders will see when they review your mortgage application.*
If you’re looking to improve your credit rating, there are many things you can do to give it a boost. Firstly, check you are on the electoral roll and secondly, close any credit card accounts which are no longer in use.
How much you can borrow
Always work out your own budget before trying to secure a mortgage. You will need to research into how much you can borrow to understand what sort of price bracket you’re in when looking for potential properties. You will also need enough cash flow to cover all the associated costs and fees that come with moving to a new house.
Your monthly mortgage repayments will depend on how much you want to borrow, and over how long. It will also depend on the interest rate. There are many mortgage calculators online you can use to help work this out.
Clear any debts
Any potential lender won’t want to see that you owe a large sum of cash on credit cards, or any outstanding loans. So, when you start to think about getting a mortgage, try to reduce any debts you may have. This will help to demonstrate that you can manage money responsibly and means your mortgage application is more likely to be accepted. It will also mean that you may be able to borrow more when it comes to lender’s adorability calculations.
Proof of income
Any mortgage lender will want to see proof of your income. You are likely to need to provide a P60 form which you get every year from your employer. This shows a summary of how much you earn, as well as tax deductions.
You will also be asked to provide three months’ worth of bank statements and payslips. This is so the lender can look at how much is coming in, as well as your outgoings.
The bigger your deposit, the better! The more you can save up now, to put down as a deposit, the bigger the choice of mortgages available to you. Lenders often reserve the best rates for those with bigger deposits. A larger deposit also means you’ll benefit from lower monthly payments because you are eligible for a better deal.
Buy with someone else
It can be very difficult to build up a decent deposit on your own, so buying with someone else can help with this. It can boost your chances of securing a mortgage, especially if you both have an excellent credit history.
Always remember that buying a house is a big commitment, so don’t rush into anything. Have a plan in place about what would happen if you, or the other person, wanted to move in the future.
When applying for a mortgage, you will be asked how long you have been with your employer for. Most lenders like to see that you have been with them for a fair amount of time.
If you’re thinking of switching jobs, try to hold off until you have your mortgage in place. It is usually a good idea to have been in your existing job for at least three to six months before trying to secure a mortgage.
If you’re self-employed, it can be trickier to secure a mortgage. Especially if you’ve only just become self-employed. Lenders will want proof that you’re able to keep up with repayments.
They are likely to ask for a SA302 form, relating to the last three years from HMRC, or your full accounts for the last three years. If these aren’t available to share, it’s unlikely that your mortgage application will be successful.
Don’t amend your application
Once you’ve started your mortgage application, don’t make too many amendments to it by changing figures, as it could delay the process. This is because, if you change the figures further down the line, your offer will be reassessed, and therefore hold up the process.
It can be useful to get professional help from a mortgage broker or financial advisor if you’re struggling to get the right mortgage deal. Whether you’re unsure as to what you’re eligible for or how much you can borrow, experts will be able to answer these questions for you.
They can research the market and help you through the application process to ensure you get your mortgage application accepted as quick as possible.
* ‘Checkmyfile’ is a multi-credit reference agency report meaning you should be able to see everything a lender is likely to see. There is a ’30 day free period’. This period starts on the day you sign up to your subscription to Credit Report Services, and ends 30 days thereafter, during which you may cancel at any time. After the 30 days they will charge £14.99 per month. If you wish to cancel your subscription, please log in and send them a Secure Message at any time, email them, or call them on their Freephone telephone number 0800 086 9360 during normal office hours. In all cases they will provide you with a cancellation reference code in confirmation.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.