Applying for a mortgage shouldn’t be a headache and while professional mortgage advisors can speed up the process, making it a much smoother one, there are steps you can taking before you start your application that will make it even more efficient. We share our top ten tips for preparing to apply for a mortgage.
1. Clear Any Debt
When a mortgage lender processes your application they are looking for a number of factors. One of them is how much debt you have and whether you are a responsible borrower. If you can reduce your volume of debt and clear any credit cards etc, this will help your application.
2. Save as Much as You Can
It goes without saying that the more deposit you have, the less you have to borrow. If you can save ten percent rather than 5%, this will increase the range of products available to you and reduce the amount you have to borrow.
3. Check Your Credit Score
It is a good idea to get a picture of your credit score before you apply to avoid any nasty surprises. If there is an unpaid phone bill or something you are unaware of, it is better to get ahead of it and take steps to get yourself in the best possible position.
4. Don’t Apply for Credit
Any credit applications will show on your credit file so it is important to steer clear of applying for anything in the lead up to applying for a mortgage. Even upgrading your mobile phone can lead to a footprint on your credit file. Avoid doing anything that can affect your credit score while waiting to apply for a mortgage. Searches will stay valid on your report for 3-6 months.
5. Get Your Paperwork in Order
The mortgage lender that you will apply to will want proof of income, a specific number of bank statements and other evidence of your suitability as a borrower. Start a file and get all of your documentation in one place so that you can give it to your mortgage broker or lender in one file. Having all this paperwork organised in advance will save the ‘to and fro’ of being asked for additional documentation.
6. Do Your Own Sums
While you may want that dream house that you have had your eye on for ages, can you really afford it? Is buying a 3 bedroom house too much of a stretch and will you be more comfortable with a smaller commitment? Work out how much your outgoings are likely to be including any bills that you will have to pay including:
- The projected monthly mortgage commitment
- Council tax on the property (or similar property) – what band is it in?
- Utility bills – gas, electric, broadband etc.
- Mortgage protection, home and buildings insurance
- Travel bills to work etc. Will you be living further away?
All of these bills add up and you need to ensure that you can afford to live comfortably when you take on a new home, especially if you have been living with mum and dad or sharing with friends. It’s better to go into it with all the facts.
7. Don’t Start a New Job
When applying for a mortgage, one of the key considerations is how long you have been in your job, whether it is a permanent position and whether you are paid as a full time employee on a fixed salary. If you decide to start a new job, this may harm your chances of getting a new mortgage. Usually, lenders will be looking to see that you have been in the same job for at least a couple of years.
8. Proof of Income
Your last year’s P60, a specific number of wage slips, a full set of accounts for at least a year if self-employed… you will need to be able to show proof of income as part of your mortgage application process so be sure to keep these things together with the rest of your paperwork ready to present when requested. This is a crucial step in preparing to apply for a mortgage so make sure you can access this.
9. Don’t Assume
It’s easy to assume that you won’t be able to get a mortgage because you haven’t got a specific amount saved or you are self-employed and can’t show so many years’ worth of accounts. Often, there are ways around these issues and solutions that you may not be aware of. It’s worth looking into – what’s the worst that can happen?
10. Contact a Broker
If you have ticked all of the above and followed all the steps in preparing to apply for a mortgage, the next step is to start carrying out your mortgage research. A mortgage broker with access to whole of market will be able to save you lots of time and potential rejection by telling you what you can and can’t borrow and what you are likely to get approved for. They will be able to find you suitable mortgages if you have special circumstances like being self-employed or working in a profession where the salary isn’t straightforward – doctors for example.
Buzz Financial are a team of expert mortgage advisors with access to the whole market. We have extensive experience in helping people in many different circumstances successfully apply for a mortgage and we are just a phone call away. Give us a call on 01934 756717 to find out more.