When you apply for a mortgage, you are in essence selling yourself to the lender. Lenders want to know that you are a reliable borrower who can keep on top of debts and pay back regular instalments, so expect a grilling when it comes to your income, expenses and ability to repay.
To ensure you are fully prepared for this, take a look at the following steps that will help to boost your chances of getting a mortgage.
Sort out your finances
Getting your finances in order, and being more organised in your daily and monthly spending is essential if you want to get a mortgage. You should aim to pay back as much debt as possible – overdrafts, loans or credit cards – so that the lender has evidence that you can cope with repayments.
A lender will also assess your expenses so they can see how much you are likely to be able to afford. If you are frivolous spender, make an effort to cut back on costs.
Check your credit file
On application of credit, most lenders will check your financial past using a credit reference agency. These compile records of your credit history and how effectively past debts have been paid.
Every time you apply for credit it will leave an electronic footprint on this record, so make sure you check it thoroughly before applying for a mortgage to ensure the information is correct. If you find anything that’s wrong get it fixed.
Build up a good credit rating
Many people will prefer to avoid applying for credit, but mortgage lenders will want to see evidence that you to have built up some debt in the past. This is because they like to know that you have been able to repay it.
Your credit rating will depend on manageable debts that you have repaid in time, and these may include a mobile contract, an overdraft, or credit card bill. Make sure you apply for credit you are likely to get so you can build up a decent credit rating.
Get all the finer details correct
There are several basic checks you should make before applying for a mortgage to ensure you represent stability and suitability. These include:
- Making sure all your debts are registered to your correct name and current address.
- Making sure you are registered on the electoral roll at your current address.
- Not making too many applications for credit in one go as lenders translate that as desperation – a need for money fast.
- Ensure there are no other mistakes on your file.
Know your stuff
Make sure you have taken the right steps to better manage your spending by choosing to reduce your household and lifestyle costs before the mortgage application stage. This includes deliberately choosing cheap broadband or energy packages, which show you are keen to keep your monthly outgoings to a minimum.
The lender is also looking for signs that you are aware of how a mortgage will impact your finances, especially if there is a sudden rate rise. Let the lender know your financial and lifestyle plan and that you have taken into account factors such as rising rates.
Above all, you need to be organised, so be ready with payslips, bank statements and any other income from bonuses or investments when you meet with a lender.