The countdown is well and truly on for the festive period, however you may already be looking ahead to the New Year and thinking about looking for a mortgage in the coming months.
If this is the case, then there are some simple steps you can take that will increase your chances of securing a successful mortgage application when the time comes. I’m often asked what you should or can do before you apply for a mortgage, whether it be as a first time buyer, home mover or a remortgage, so here’s some helpful information to get as ready as possible.
1. Check your credit report.
Your credit profile plays a crucial role in the mortgage approval process. You can check your credit report using a credit reference site such as Check My File for any current or historic issues such as defaulted payments or arrears over the last six years and tell your mortgage broker about it as soon as possible. They can guide you on what to do to rectify it which should then help your application.
2. Bank account conduct
Contrary to popular belief, getting a regular coffee or buying your lunch every day will not mean you can’t get a mortgage. Lenders recognise that people need to live their lives so things like that will have very minimal bearing on things. What will have an impact is if you’re constantly within, or going over, your overdraft limit, have returned direct debits or showing large amounts of gambling transactions in a short period of time, relative to your income. So always best to review your account conduct up to three months before you’re looking at a mortgage so that you can evidence you can manage your finances properly every month.
3. Avoid new credit agreements
Hard searches are recorded on your credit file every time you open a new credit agreement, this can impact your ability to obtain credit and ultimately a mortgage. However, the key thing to remember is to avoid multiple new agreements in a short space of time, this can quickly reduce your credit score and profile in the eyes of a lender. If you can wait to get that new car or sofa on finance until you’ve sorted your mortgage, then best to do that.
4. Get on the electoral roll
One of the easiest things you can do is ensure you’re on the electoral roll at your current address. It’s a simple thing to forget to do but can impact the scoring mechanisms of lenders if they can’t identify your personal and address history via their internal systems. So, aim to get added to the Electoral Roll at your current address to avoid complications further down the line.
5. Check your documents
A main part of the mortgage process is providing supporting documents to evidence your income and outgoings, usually in the form of payslips and bank statements. It’s important to ensure that your name and address is correct and matching on all documents so that it avoids delays or further questions by lenders once an application is submitted.
6. Get a ‘Decision in Principle’.
This requires you to have an initial appointment with a mortgage broker who will get a good understanding of your personal and financial information which will help determine a likely borrowing amount. They will look to get a provisional agreement in place with the best lender they can for your scenario. By having a decision in principle in place, it can also strengthen your position when making an offer on a property and helps you to act quickly when you do find your new home.
By taking these simple practical steps you can present yourself as a responsible and reliable borrower and improve your chances of a successful mortgage application.
I hope that’s proved useful and as always just get in touch if you have any questions.
