Here at The Residential Mortgage Hub we understand that the mortgage application process can be difficult to navigate, even for those who aren’t buying their first home. It’s important to understand that a range of factors will influence the outcome of your mortgage application. These range from the type of property you’re buying to your employment situation. To confuse things further, each lender also has different criteria for assessing mortgage applications. In this easy guide, we’ll explain some important steps you can take to boost your chances of having your next mortgage application accepted.
Have a regular income and a stable job
Mortgage lenders are more likely to approve your application if you’re in stable, long-term employment. You will typically need to have been employed for a minimum of three months in your current job before applying. If you’re thinking about moving jobs, it might be better to wait until after you’ve secured a mortgage. Similarly, if you’ve just started a new role, you may be better-off waiting a while. However, there are ways round this if need be – see our blog article for more on this. If you’re self-employed, lenders will expect to see detailed evidence of your income.
Get on the electoral register
This may seem odd, but lenders will always check whether you’re registered to vote at your current address. It’s one of the main ways that they check your identity and where you live, and is a vital step in improving your application. You can ask to be added to the electoral register at any time by contacting your local council. If you’re concerned about privacy, make sure you’re only added to the electoral register that is not publicly viewable. Alternatively, if you are on the ‘open’ register, your details will be available to the public.
Maximise your credit history
The better your credit history, the more favourably a lender will view your mortgage application. There are three main credit agencies: Equifax, Experian, and Transunion (formerly Callcredit). You can get your statutory credit report for free from any of them. Websites such as Credit Karma (formerly Noddle) and ClearScore also offer this information.
It’s important that you check your credit report carefully. Occasionally, the records include mistakes which could pull down your score and damage your ability to get credit, including a mortgage. If there are any errors, contact the credit agency to get them corrected.
If your credit history is not very strong, it may take some time to build it up. Any past incidents where you missed bill payments or had problems with debt could be a significant black mark on your record. To ensure you never miss a payment, consider setting up direct debits for regular bills. Also look at your overall credit use. It’s often better to close down credit cards or accounts you no longer need or use.
If you have never taken out credit, you may not have a credit history at all. Lenders may be reluctant to offer you a mortgage in this case and you may need to spend time building up a positive record. One option is to take out a credit card and spend small amounts on it, repaying it in full every month.
Use free credit-building tools
If you’re trying to build a good credit history, there are a number of fantastic free tools out there that aim to make it a bit easier. Money Saving Expert’s Credit Club is a suite of tools that brings together your Experian credit score, an ‘affordability score’ that shows how much you can afford to repay, and a ‘credit hit rate’ that works out your chances of getting a top loan.
If you’re currently renting (and you pay your rent on time), the free Rental Exchange scheme can help you use that to your advantage. The scheme involves paying your rent to Credit Ladder – a third party who will pass it onto your landlord. Credit Ladder notifies Experian, the credit reference agency, whenever you pay on time, creating a clear record of reliable payments that could boost your credit score.
Increase the size of your deposit
This is a somewhat obvious but having a larger deposit will boost the odds of your mortgage application being successful. More than often it will open the door to better deals with lower interest rates. The minimum deposit you need to save up in the current market is usually 5% of the property’s purchase price.
Prepare well before applying for a mortgage
Get prepared. By using a mortgage broker they will make sure they have all of the relevant paperwork to hand before submitting your application to the lender. It may sound simple, but remember to be truthful and take care when filling in the application forms. Small mistakes on your application can cause big delays. In some cases, the whole application may have to be re-submitted and checked again. Don’t apply for multiple mortgages at the same time, as this will bring down your credit score. Only apply for the mortgage you really want and think you’re likely to get. A mortgage broker we will be able to help you with this. If you get turned down for a loan, leave some time before applying again.
Get in contact with our team today to discuss your mortgage options and see how we can help you on 01634 968111.
