17 Great Tips to Help you improve your chances of getting a Mortgage Part 1
Here at Bristol, Weston, Bath and Exeter Mortgages Online, we understand that getting your first mortgage, or even a remortgage, especially if your circumstances have changed, may look like an impossible task, but we are here to help.
We hold your hand from your initial enquiry through to the completion of your purchase. It's not that tricky and there are ways you can improve your odds and boost your chances of a successful mortgage application.
You'll need to be as attractive as possible to lenders if you want to get the best mortgage deal. Here are some top tips on how to boost your chances of getting the deal you want. 17 tips adapted from www.moneysavingexpert.com.
This blog includes Tips 1 to 10, others to follow soon.
Tip #1 Don't expect every lender to fancy you.
Every lender has its own method to decide whether it wants to lend to you. It's like a beauty parade and lenders will be rating you against their ideals. If you fit a lender's criteria, you'll most probably be accepted quickly. If you're far from ideal, you'll most likely be rejected.
But for people in the middle, it's more of a grey area and the lender's scorecard will be based on several factors, such as:
· The size of loan you want to take out
· How much you've saved as a deposit
· Your employment status and income
· Your credit rating
· Your outgoings
· Your existing debt
How we will help you: We will use our expert knowledge to look at the whole of the mortgage market for you to match your needs and requirements with the most appropriate lenders to get the best deal.
Tip # 2 Check your credit score before they do.
You need to convince lenders that you've got the financial discipline required to pay back your mortgage. One way they investigate this is by searching your credit report(s) to find out if you've a good repayment history.
Your credit report lists your past credit cards, loans, overdrafts, mortgages and even mobile phone and some utility payments, for all accounts that were open over the past six years.
It used to be that you'd have to pay to get your credit report, though now you can get them all for free. It is worth checking all of them, as you don't know which one(s) your future mortgage lender will use as a reference point.
Some examples to use are
How we will help you: We will gladly look at your credit report in advance and give you guidance on how it could be improved, if necessary. We can also consider applications for those who may have existing Adverse Credit issues.
Tip #3 Correct credit score errors pronto.
If your credit file information is wrong, you have a right to do something about it - either having the error corrected or, at the very least, having your say.
Your first step should be to check if the error is on your credit file held with other agencies, then talking to the lender. If this doesn't work, the free Financial Ombudsman could step in and order corrections.
How we will help you: We will gladly talk through any errors you may have and discuss this on your behalf with potential lenders. We can also advise you on prioritising sorting any issues.
Tip #4 Register to vote or you'll have no chance.
This is a deal breaker. While you can have a perfect credit score without being on the electoral roll, it's still ALMOST impossible to get a mortgage without it. Lenders use electoral roll data in identity checks (to ensure you are who you say you are, and live where you say you live and that you're not laundering money).
Your credit file will say if you're on the electoral roll or not, but you can also check with your local council. Do this as early as possible. While you can usually be added within a month, in late summer and early autumn it could take longer.
If you're not on it, you can register on the electoral roll for free. If you're not a UK citizen and thus can't get on the electoral roll to vote, then you can put a notice of correction on your file, saying you have other proofs of address and ID you can offer lenders (assuming that you do).
How we will help you: From the very first initial free consultation, we will advise you about the correct documentation and any required actions that you will require for a successful and timely mortgage application.
Tip #5 Your ex-partner’s score can wreck yours.
If you're financially linked to someone else (which only happens when you apply for joint credit, such as a bank account, mortgage or loan) but you're now separated or have nothing to do with them, then de-link yourself.
If not, any late payments or misdemeanor they've committed will reflect badly on you. Write to the credit agencies and ask for a notice of 'disassociation'.
You could still be linked to old flat mates if you had a joint bank account for bills, so it's worth checking that their credit history isn't affecting yours. If it is, de-link yourself quickly.
Even if the person you're linked to has a good history now, you still risk problems in future if they miss payments.
How we will help you: If you think this may be an issue, we will work with you to establish what action needs to be taken prior to any application being submitted.
Tip #6 Carefully manage your available credit.
This is all about how much credit you have available to spend on credit cards and overdrafts. It's the difference between your combined debit balances on your cards and bank accounts and your combined credit limits/overdraft limit.
You need to strike a balance between not having too much - as lenders may think you could rack up more debt by spending it all - and not getting too close to your limits, which makes it seem that you're at the edge of your finances.
Credit agency Experian says that if you have debts, lenders prefer that they make up less than half your available credit. So, if you've a combined limit of £10,000, they'd rather you use less than £5,000 of it.
If you are using a decent proportion of your available credit, avoid lowering your limits so you're suddenly close to the edge. Similarly, don't have tens of thousands of pounds of available credit unnecessarily - new lenders get twitchy that you could suddenly be far more indebted than you currently are.
This is an art, not a science, and all lenders' views of how much credit you 'should' have differ. Try to stay below 50% in all cases. Of course, if you can pay off debt, you should do so.
How we will help you: We will complete the necessary affordability forms with you so that you are clear from the outset about all income and expenses that a potential lender will consider. We will also ensure that you have a clear understanding of all repayments and costs involved.
Tip #7 Close old, inactive accounts or they can kill your application.
If you're not using an account, it may be worth closing it. Leaving it open could not only be a fraud risk but could also mean some of your details may need to be updated.
However, if applying for a mortgage, longer, stable credit relationships are a positive. So, if you've two credit cards, one recently opened and an older one, it's probably not worth closing the older one before the mortgage application as you could lose the credit score boost it gives you. If you are closing an account, just cutting up the card isn't good enough - you must tell the bank you want it closed.
How we will help you: When preparing all the documentation that you will need us to submit, include all accounts and details of all open accounts/cards etc., even if they are not in use, this will help us progress your mortgage more quickly and smoothly.
Tip #8 Want a mortgage? ALWAYS pay ALL your bills on time.
It's obvious - so do it.
All missed payments count against you on your credit file, so it's vital to keep up all repayments on ALL your outgoings. Defaults count against you for at least a year, and they'll stay on your file for the next six years. Miss just one mobile phone payment and it could be the difference between getting a mortgage and not.
Set up a direct debit on all accounts to make sure payments are made on time.
How we will help you: We are often dealing with clients months ahead of a purchase or move, so it is important to keep all payments up to date during that period so there is no change or interruption to your application.
Tip #9 Don't apply for credit shortly before a mortgage.
Try to avoid applying for credit in the three months before getting a mortgage - it could hinder your score and lead to rejection. Some recommend at least a six-month gap, to be absolutely safe. This is because lenders will search your credit file every time you apply for a loan, credit card, overdraft, or even a mobile phone or utility contract. This search is registered on your file even if you don't take out the contract.
The more searches you have in a short time, the less likely you are to be granted credit, as you could be viewed as desperately seeking borrowing.
If you NEED to apply for credit, it's unlikely that one application will hurt all that much, provided it's affordable.
BUT - if it's a payday loan, some lenders will decline you for a mortgage if you've had one in the past year.
How we will help you: We work closely with our clients during the process from application to completion. Any change of circumstances especially financial should be advised to our Advisers or Administration Team on an immediate basis in case it may negatively impact on your application.
Tip #10 Cut back on spending before you make your mortgage move.
Lenders will ask for a lot of detail about your outgoings and may even want to see bank statements to verify what you've told them. This is because new rules brought in in April 2014 mean the lender has to 'stress test' you.
Don't worry, this isn't hooking you up to wires checking if you're telling the truth - it's checking you'd still afford your mortgage if rates went up to 6% or even 7%.
The lender may ask for your latest three months' bank statements before you apply. It will use these to check your income matches what's on your payslips and examine your recent spending.
It's worth tightening your belt in the months before you apply. Don't go getting a round in for everyone in the local or spending every Saturday night in a casino - especially if you're applying for a large mortgage that will put some pressure on your monthly budget.
It also makes sense to live a little frugally in the run-up to buying your first home. Moving costs are high, so every penny you save means a bigger budget to meet unexpected costs.
How we will help you: The affordability and Fact Find forms are very lengthy and detailed. We will help you with the completion of these and all other forms of documentation to ensure that you have a more stress-free experience.
For further details about the mortgage and protection products we offer as a fully independent mortgage broker, or any other mortgage information, book your FREE CONSULTATION with one of our expert Mortgage Advisers.
Bristol Mortgages Online www.bristolmortgagesonline.com Tel 0117 325 1511
Bath Mortgages Online www.bathmortgagesonline.com Tel 01225 584 888
Weston Mortgages Online www.westonmortgagesonline.com Tel 01934 442 023
Exeter Mortgages Online www.exetermortgagesonline.com Tel 01392 690 888
Email info@swmortgages.com
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