Disclosure – This is a collaborative post.
Buying a home is likely to be one of the largest purchases you will make. It’s something most of us will work towards for years, and getting approved for a mortgage is a key step in realising that dream.
Demand for mortgages has actually dropped in recent years. While it might feel like you’ll never get there, there are steps you can take to prepare yourself and improve your chances before applying.
The aim is to make yourself as attractive to money lenders as possible, and while each one will have its own criteria, here are four ways you can get yourself mortgage-ready before you apply.
A solid budget
With your ideal home in mind, a budget is a good place to start. Before you apply for a mortgage, put some time aside to make sure that you can afford to borrow enough to cover the cost of the property and any associated fees that come with it. Check out various mortgage companies (Metropolitan Mortgage: check out our mortgage company) before you plan on working with any one of them.
You’ll need to work out how much of a deposit you can put down too – a large deposit will improve your odds of being accepted. Your budget should be as comprehensive and realistic as possible – remember to factor in any bills that come with the property such as energy, broadband and council tax.
A healthy credit report
Lenders will look at your credit report to see if you have a good repayment history. This will include any credit cards, loans and even mobile phone contracts you have had in the last six years.
There are lots of ways you can manage your finances, and checking your credit report for errors or ways you can quickly improve your credit score is one of them. This could mean anything from paying off debts to closing inactive credit accounts to registering to vote.
Evidence of stability
While your credit report looks at your finances over the past six years, it’s even more important to be careful with them in the few months prior to your mortgage application.
Lenders may request to see your recent bank statements to look at your outgoings and check that you are living within your means. Living frugally will not only look good to lenders but will give you a little more to work with if the moving process costs more than you expected.
It’s also wise to avoid applying for any new credit prior to your application as this can make you appear more desperate for cash.
Getting your paperwork together to send in one batch will help to speed up the application process and reduce the chances of multiple people looking at it and finding issues.
Lenders may ask to see some or all of the following:
- Recent bank statements
- Your last three pay slips
- Your most recent P60 tax form
- Three years’ worth of accounts
- Proof of deposits
- ID documents
Many lenders won’t accept printed versions of bank statements, so ask for the originals in advance. Now that you know some of the factors that influence your chances of being accepted for a mortgage, you’re better placed to get started
If you already have a house check out my top tips for house maintenance.