In this day and age it is very rare that a mortgage applicant will be accepted by every lender as it all boils down to a combination of factors such as affordability, credit score, age and existing debt.
Obtaining a mortgage can seem daunting but there are some things that you can do in preparation for putting in that application form that can improve your odds.
- Be prepared with your credit status – it is always a good idea to check your credit report. A lender will do a credit search as a matter of course but if you know where you are with your credit at the start of the process it makes things a lot easier when choosing who to apply to. You can check your credit for free on www.creditkarma.co.uk or www.transunion.com. If you note any errors you can try to get this corrected. If there is some poor credit which cannot be challenged then speak to your broker who can advise on the best course of action moving forward.
- Electoral Roll – if you are not registered to vote it will count against you when applying for a mortgage. You can check this by looking at your credit report or checking with your local authority. If you are not registered you need to do this as soon as you can.
- Check financial links – your credit report will tell you whether you are financially linked to someone else. If they have poor credit such as missed payments this can affect you too. Check this on your credit report and if this is the case you need to write to the credit agency immediately to disassociate yourself from the person in question.
- Check your bank statements – it is worth having an audit of all your outgoings to cancel anything that may no longer be required. For example, an unused gym membership or TV subscription. More often than not lenders will look at your outgoings to assess affordability so the slicker this can be the better.
- Set up direct debits for all outstanding credit – Lenders hate missed payments so avoid this trap by setting up direct debits for any credit cards, loans etc.
- Avoid your overdraft – if you can stay out of your overdraft I can be beneficial as some lenders will look to assess your general behaviour around money and your overdraft can be a measure of this.
- Save for a higher deposit – For all mortgages you need a deposit (usually a minimum of 10%). However, the more you can save the better as not only does this mean you may benefit from a better rate but the multiple of earnings a lender is prepared to lend you may improve.