If you are planning to buy a home, then it is important to know what factors can affect your ability to get a mortgage, both in terms of suitability and affordability. We want you to be as ready as possible when the time comes to apply, which is why we have put together five ways to best get yourself prepared to go through the mortgage process.
Register to vote
Being on the electoral role is one of the most important factors in getting a mortgage. Even with a good credit score, some lenders may deny you a mortgage if they are not able to access data on the electoral role to identify you.
It’s free to get onto the register, but not being on it could cost you time and opportunity when it comes to applying for a mortgage.
Check your credit score
Not only is it a good idea to check your credit score before applying for a mortgage, it is also important to maintain it. Try to avoid applying for credit up to 3 months leading up to the mortgage as this will help your rating.
Your credit file can be viewed with several UK credit reference agencies, normally for a small fee. It is good to take this step early, as any low scores may be corrected using several measures. It may also be a good idea to ensure an unused cards are cancelled in the months leading up to the mortgage process.
Save as much as you can
The more deposit you have ready to put down, the more likely lenders are to offer you a mortgage for your dream home.
Fortunately, the government has rolled out schemes to help you. The Help to Buy ISA and Lifetime ISAs give you 25% bonus on limited savings when used to buy your first home. These savings can be used alongside the Help to Buy: Equity Loan scheme, which has already helped thousands of people get onto the property ladder.
Get your paperwork ready
You will likely need the following paperwork ready to send to the lender, preferably in one go to increase the efficiency of the process: Your last 3 months’ bank statements, which you may need to obtain well in advance, especially if you have switched to online statements Your last 3 months’ payslips, latest P60 and any proof of bonuses, commission and deposits Last 3 years’ accounts and tax returns ID documentation, usually a passport Proof of address, such as credit card bills or utility bills A gift letter if necessary
Prepare for the ‘stress test’
As mentioned above, lenders often want to see details about your outgoings, so reducing your non-essential spending can be a good way to show your affordability. Lenders want to make sure that you can afford the outgoings of a new mortgage if interest rates increased. This is called “stress testing” by lenders, and has been used since the 2014 Mortgage Market Review came into place to protect consumers.
If you would like to discuss this, or any anything else, contact our advisers today on 01202 937444 or visit our other websites to speak to a mortgage broker in Reading or a mortgage broker in Bournemouth