7 things to do before applying for a mortgage
Taking out a mortgage is likely to be the biggest financial commitment you will ever make. It makes sense to maximise your chances of getting a mortgage before you start your property search.
There are many factors that can impact the chances of a successful mortgage application so we’ve put together seven mortgage advice tips below, to help you ensure your application for getting a mortgage is a success.
Check your credit record in advance of applying for a mortgage to give yourself time to take any necessary steps needed to correct it.
Most high-street lenders use a computerised credit scoring system to assess whether an individual applying for a mortgage is credit-worthy. Having no evidence of your ability to manage credit can actually be as detrimental as having a poor credit score. The lender simply doesn’t know if you will be able to manage a mortgage.
One way to build your file is to take out a credit card which is paid in full every month. This may be for small incidentals such as food or fuel. It is imperative you pay this credit card every month (preferably in full to mitigate interest) and demonstrate to the lender you are responsible with financial commitments.
There are three main credit reference agencies used by the majority of lenders, namely Experian, Equifax and Callcredit and most agencies offer a free month’s trial, enabling you to check your record without subscribing.
Checking your credit report is useful at this stage and it is very important to dispute any inaccuracies, so you are not unfairly penalised when you come to proceed with your mortgage application.
Being listed on the electoral roll is another important step to getting a mortgage application accepted. Even with a near perfect credit rating, it can be very difficult to obtain a mortgage without being on the electoral roll, as lenders will want to validate that you live where you say you live.
You can find details of how to get onto the electoral roll here and we recommend doing this as soon as possible as it can often take over four weeks to be added.
Your lender is going to want to see some documents from you when you apply for a mortgage. Ensuring you have all of these documents to hand before the application process begins can mean your mortgage application goes to offer as quickly as possible.
Items which lenders will typically want to support your mortgage loan application include proof of your address, your last three months’ pay slips and original bank statements, your last P60 form, proof of any bonus or commission earnings, proof of saving account statements you are using for your deposit, proof of your identity (normally a passport).
If you are self-employed, SA302s for the last 2-3 years will be requested.
When applying for a mortgage, most lenders will ask to see your bank statements, usually at least the last three months. Before applying for your mortgage, make sure your bank statements are conducted as well as possible with no missed payments and not exceeding any agreed overdraft limit.
Being over your agreed limit – or missing direct debit payments – is likely to result in your mortgage being declined. Being inside of your agreed overdraft limit is acceptable, but do bear in mind the lender may treat your overdraft as a credit commitment, reducing the amount you may be able to borrow.
The larger your deposit, the better your mortgage interest rate is likely to be and the more likely your application is to be accepted.
As a first-time buyer consider the Help to Buy ISA and the Lifetime ISA to maximise your savings potential and take advantage of bonus payments available from the government.
Online mortgage comparison sites can be useful tools, but you may not know if you are eligible for the best deal being advertised. Additionally, the lowest interest rate advertised may come with hefty arrangement fees, making it more expensive than a product with a slightly higher rate.
If you’re unsure of the best product for you, or need to know what level you could borrow or purchase at, enlist the help of a mortgage adviser. They can research the market for you and apply to the lender with the most suitable product for you.
Our handy mortgage payment calculator can give you an early indication of the amount you may be able to borrow.
Some lenders will be more welcoming of borrowers with smaller deposits, while others take a more strict view of credit blips. Additionally, some lenders may prefer not to deal with properties made from non-standard materials. Advice from an expert mortgage adviser will help you get the best mortgage deal which fits your precise circumstances.
It is preferable not to change your job too close to applying for a mortgage. Many lenders prefer to lend money to applicants who have been in a stable job for a long period – normally at least six to twelve months is sufficient but this will vary from lender to lender.
Lenders have firm income requirements and if you are self-employed, will want to see an SA302 confirming your income. This form will be requested for the last 2-3 years of your self-employment. If you are unable to evidence this, it will be difficult to secure a mortgage.
We’re here to help
At Cooper Associates we understand applying for a mortgage can seem a daunting prospect. That’s where we can help. If you are thinking of applying for a mortgage please contact us, as our mortgage advisers are on hand to answer any questions you may have and support you throughout the mortgage application process. We are delighted to report over 94% of all our mortgage applications in 2017 were successful, so you will be in very safe hands.
We treat every client as our only client. Our mortgage consultants are available to answer any question you may have before you apply for a mortgage ensuring that when it comes to your application, you stand the best possible chance of success.
To find out more please call 01823 273880 or complete this form and we will contact you as soon as possible.
Watch our first-time buyers, Harriet & Stuart talk about their experience of buying their first home through Cooper Associates.
