Shake-ups to the rules, fears of a new housing bubble and tightening of lender purse strings have made it more difficult to get a mortgage, which is a scary prospect for anyone looking to buy their dream property.
Home loans aren’t off the table by any stretch, but criteria is certainly tougher and the lower-risk you seem, the better. Here are some simple ways you can make yourself more attractive to mortgage lenders.
Check your credit score…
Lenders are going look at your credit record, so make sure you know how it reads. Your credit file lists all credit cards, loans, overdrafts, mortgages – even phone and utility bills – that have been open over the past six years, and lenders will use it to find out if you have a good repayment history. You can check it yourself online using services like Equifax or Noddle.
…And improve it where necessary
Paying debts on time, closing any inactive accounts and staying out of your overdraft will all improve your credit score. Make sure you aren’t financially linked to any ex-partners whose credit score might negatively impact yours and correct any errors you notice on your report. Make sure your credit cards aren’t at their limit either (even if you’re making regular repayments) as this suggests you’re at the edge of your finances.
Register to vote
It sounds so obvious, but you’d be surprised how many people don’t realise that not being on the electoral roll is a dealbreaker. Lenders use the roll to verify your identity so if you haven’t registered to vote it’s almost impossible to get a mortgage. Check with your local council and register as early as possible – you should be added within a month but in late summer and early autumn it could take longer.
Be strict with your spending
Run your bank account as though you already have a mortgage for at least three months before you apply. That means cut all unnecessary spending and think about where your cash is going and how that might look to lenders. Betting, for example, should be avoided because lenders don’t look favourably on it, and it goes without saying that you should steer well clear of payday loans. In fact, you shouldn’t apply for any loan or credit in the three months before getting a mortgage because lenders could assume you’re desperately seeking finances.
Stay in the same job
Most lenders want to see that you’ve been with your current employer for a decent amount of time so if you’re itching to change jobs, it’s better to hang on until your mortgage is in place. Similarly, if you’ve recently joined a new company, it’s a good idea to have been there for at least three to six months before applying for a home loan because some lenders will be wary of lending if you’re still in your probationary period.
Save the biggest deposit you can
The bigger the deposit, the wider the choice of mortgages available to you. Lenders also often give their best rates to the people with the largest deposits so if you can put up a good amount at the start your monthly repayments are likely to be lower. In the long run, it’s usually worth taking the extra time to save the largest deposit you can because you’ll qualify for a better deal.
Have paperwork ready
Having your paperwork ready not only speeds up the process, but also means you can send everything off in one go which reduces the chances of your application being reviewed by multiple people who all have the potential to say ‘no’. You’ll likely need to provide three months’ worth of pay slips and bank statements, your latest P60, proof of any deposits and the relevant ID documents.
Get help
Finding the right mortgage deal isn’t easy and it can be difficult to work out what you’re eligible for and how much you can borrow. A mortgage broker or advisor can help you navigate the market, assist with the application process and can find the most suitable rate for you. At KMA, for example, we have access to the entire market as well as exclusive products which are only available through certain advisors.
If you would like to discuss this topic in more detail or discover how Key Mortgage Advice can assist with your mortgage application, please contact us on 01772 620 000 or email enquiries@keymortgageadvice.co.uk