With all the negative press surrounding getting onto the property ladder, it can seem like there is a mountain to climb and hoops to jump through, but with a bit of planning, you can put yourself in the best possible position to be approved for a mortgage.
So where do you start looking for a mortgage? Well you have a couple of options, you could go directly to your bank, where they’ll be able to advise you on their own products or you could go to a Mortgage Broker who will have access to multiple lenders including high street banks/building societies/lenders and non-high street lenders.
The broker or lender will need to sit down with you and look at your earnings and your outgoings to check that the loan is affordable. They will include any debts such as loans, store cards and credit cards along with any household bills. They’ll then check that you have enough cash left over to pay the monthly mortgage repayments. The lender will also be checking your credit score, if you are concerned that you may not get a glowing report, it may be worth checking this for yourself before you apply for a mortgage to ensure there are no incorrect details about you. Here are some links to credit check companies:
When applying for a mortgage you’ll need to provide (where applicable) the following documents, it would be wise to start collecting these as soon as possible:
- Utility bills (Gas, Electricity Water, Council Tax etc. to prove your address)
- Proof of benefits received
- P60 form from your employer
- Your last three months’ payslips
- Passport or driving license (to prove your identity)
- Bank statements of your current account for the last 3 to 6 months
- Statement of two to three years’ accounts from an accountant if self-employed
- Tax return form SA302 if you have earnings from more than one source or are self-employed
- Self-employed people should look to provide information alongside their tax return, which supports what the SA302 says about their income, such as bank statements
- To give you the best chance of being approved, make sure the information on your application exactly matches that of the documents you supply. E.g. your salary should not be rounded up or down, give the exact figure.
- Ensure you provide details of the estate agent, property address and solicitor if you have them.
Bear in mind, printouts of online statements of your current account and utility bills might not be acceptable. You will either need hard copies or to have copies certified by your solicitor, your bank or your utility provider.
You might also need to show your outgoings, including how much you’ve outstanding on credit cards and other loans, as well as household bills, living costs such as childcare, going out, holidays, car costs and insurance policies. Once you’ve provided all of these details, your bank or broker will be able to recommend a mortgage for you.
But before you apply for a mortgage, here are 3 important things to remember.
- Don’t take out credit (loans/credit cards) just before you apply for a mortgage, as this can affect your credit score and in turn make you a less attractive option to lend to.
- Make sure you always pay bills including loans and credit cards on time. Late payments can have a negative impact on your credit rating and this is what the lenders will be looking at when you apply for a mortgage.
- Do try and stay out of your overdraft. The lenders will be looking to make sure you can afford to repay the mortgage and want to see that you can manage your money.
Please note the content of this blog is for guidance purposes only and does not constitute for professional advice. Contact us today at firstname.lastname@example.org or by calling 01473 216950.