SO you need a Mortgage?
Getting a mortgage is likely to be the biggest and most important financial commitment you will ever make. Finding the right deal is very important and there are a few things you can do to improve your chances of getting a mortgage.
Check out our top tips to help you get the right mortgage.
Your credit score is important:
Before taking the big step and getting that mortgage you need to make sure your financials are in order. You will need a copy of your credit report which you can get from credit reference agencies such as Experian or Equifax .
This will show you what your potential lender will see. There are lots of simple things you can do if your credit report has any issues, make sure you settle any overdue credit card accounts, pay off outstanding loans and any bills like your mobile phone bill as you will find out next, can cause a big problem.
My friend Alex kept getting rejected for mortgages and he could not understand why. He had a big deposit, a very good wage and had never been in serious debt, but he kept getting no’s. He did a credit check and found out he had a mark on his name because of a £12 mobile phone charge that he had not paid 4 years earlier. It turned out this was a mistake by the mobile phone company, however from this story you can see the littlest thing can cause a big problem, so checking and resolving can prevent the headache Alex went through.
Make sure to sit down and work out your budget before applying for a mortgage. You will need to work out your borrowing potential based on your income. You will need to make sure you have enough to cover the cost of your potential new home and other fees associated with buying a new home, like legal fees included in the conveyancing process.
You need to know how much you can borrow against what you earn and can lay down as a deposit. Click here to check the figures
Make sure you come back for what’s next.
It is always an advantage with lenders when you have been in the same job for years and not months. This shows you have a reliable and stable income, this shows that you are less of a risk than if you are changing jobs often or have not been in a job for long.
Don’t worry, this is not to say that you will not be accepted for a mortgage if you have recently started a job, but it may affect the number of lenders you can choose from.
Debts will get in the way:
The last thing your potential lender will want to see is that you owe money all over town, credit card debt and outstanding loans will be an issue.
Before you apply for a mortgage it is best to try and reduce or even pay off any outstanding debt. This will show that you can manage your money responsibly and will mean your application is much more likely to succeed. This will also help with the amount you may borrow based on the lender’s affordability calculations.
Proof of income:
You will need to provide your P60 form which you can request from your employer. You will also likely be asked to produce three months’ worth of bank statements to show your incoming and outgoing transactions.
If you are self-employed:
Getting a mortgage when self-employed can be little trickier, especially if it is a new venture with not much history.
Lenders need to know you can keep up with repayments and will likely ask you for an SA302 form relating to the last three years from HMRC or your full account for the last three years.
It’s all about risk, you want to show the lender you are a safe bet. Keeping good a financial record and a lengthy history of trading are the keys if you are self-employed.
Deposit – The bigger the better:
This is the simple part, the more of a deposit you have the better your chance is of securing a mortgage with favorable terms. Lenders give their best rates to those with big deposits. This means you will likely get a better deal and benefit from lower monthly payments.
You should get help:
Although D.I.Y is ever a popular way to do a lot of things when it comes to mortgages it helps to see a professional. Mortgage brokers are professionally trained to give you the correct advice and support when applying and getting a mortgage. They will have a great knowledge of the deals around and will be able to point you in the right direction.
Many thanks and if you have any questions feel more than free to contact me HERE.
Thanks for taking the time to read all the way to the end, Nick