How to Get a Mortgage: 101
Does the first rung of the property ladder feel like you’ll have to pole-vault to even reach it? You’re not alone. It can seem out of reach, impossible, even.
Don’t fret, there are simple steps you can take to make sure you’re doing everything in your power to get your first place. There’s plenty you can do to improve your chances, make sure you’re getting the best deal and get a big fat YES on your mortgage application.
Your Credit Score Matters
Before you start the application process, you need to get a copy of your credit report to get an inside view on what lenders will see when they review your application. Register with a credit reference agency like Experian or Equifax to get the low-down.
The crucial advice here is that if there are any blips, you can act on them fast to give your rating the boost it needs. Simple tips like getting yourself on the electoral roll, or closing down unnecessary credit accounts can go a long way towards bumping up your points. This handy article from Moneyfacts will give you even more top tips on boosting your credit rating.
Move, You Lose
It might seem unfair, but moving jobs (albeit to a better one) might hinder your chances of getting a mortgage. It makes lenders happy to see you’ve been in a job for a decent amount of time; it tells them you’re a safe bet and dependable.
It can be a bit of a Catch-22 when a better paid job would improve your chances of getting a mortgage. The answer? Wait it out. Three to six months in a new job is the minimum you need to wait, and definitely until you’re out of the probation red zone.
Clear as Much Debt as Possible
Imagine you’re a mortgage lender reviewing your application. The last thing you want to see is a ton of cash on credit cards, or outstanding loans. Admittedly, it’s unrealistic to think that someone would have zero debts in this day and age, but try to clear as much as you possibly can before applying.
It shows that you can handle your money responsibly, will be more likely to make mortgage payments and will potentially be able to borrow more from your lender. Check out this informative article from Moneysupermarket on how to clear your debts quickly.
Put Your Money Where Your Mouth is
That’s right, you’re going to need to show proof of income to potential lenders. That’ll be in the form of a P60, payslips and bank statements if you’re employed. The most recent three months payslips and bank statements is normally the minimum requirement but be prepared to provide more if asked.
If you’re self-employed it’s going to be a little bit trickier. You might run the most dependable, steady business out there but the term ‘self-employed’ still sows the seed of doubt.
Lenders want to see proof that you’re going to keep up any repayments, so hit them with as much certainty as you can give. They’ll usually ask to see SA302s or Tax Overviews and Calculations for the last three years. They may also ask for your full accounts for the last three years. You need to have these available for any chance of the green light.
Bigger the Better
Having a big deposit opens up a number of doors for you. Lenders reserve the best rates for those with hefty deposits, which means you’ll snap up lower monthly repayments overall.
Accept a Helping Hand
It’s advised that most mortgage sales go through an adviser these days. It makes sense – the mortgage landscape can be overwhelming with information and having someone who understands the market can help you get where you need to be quickly and efficiently.
Our own in-house adviser can happily take you through all your options and demystify the process. The road to scoring your first mortgage can be a stressful one. But if you take all these steps, you’ll be on a much clearer route to getting accepted – and turning the key in the lock of your first home!
Helping You Find a Mortgage That Fits.