Applying for a mortgage is the most daunting thing you will do in your adult life. Saving up for your first home is something which feels amazing, however, it is a scary experience to take the leap and submit a mortgage application with a lender.
If you have just reached a stage in your life where you are ready to go house shopping by subdivision in your local town or city, we have some helpful tips and tricks to help you ensure that you will be accepted for a mortgage this year.
1. Save a big deposit
The hardest thing to do when you are trying to buy your first home is saving up for a deposit. Your deposit will be the biggest cost you face when buying a house and it is arguably the most important part of the buying process. It is important for you to try and save up as much money as you can for a deposit, and this will help boost your odds with a lender immediately. These days, a deposit of 20% for a home is seen as a great achievement and it is important to for you to try and get as close to this figure as you can. Of course, the cost of living is incredibly high and this can be a mean feat, but it is worth trying your hardest to get to this point as a lender is much more inclined to accept you with a 20% deposit than a 5% one.
2. Know your credit score
If you are unfamiliar with what a credit score is, let’s give you a little refresher. A credit score is a measurement which is calculated using your past credit history such as a phone contract or monthly credit card payment, and it is something which indicates to a lender how trustworthy you will be when paying back a loan. It is incredibly important before you apply for a mortgage that you check and understand your credit score so that you are able to make improvements and changes if you need to. If you have never taken out credit, your score will likely be low. This is why it is a good idea for you to take out a small credit card and pay it back for a few months to increase your score.
3. Pay off unsecured debts
It is incredibly important when applying for a mortgage that you do not have any large debts which are outstanding. When applying for a large investment such as a mortgage, it is incredibly important for you to not have any dents which might hinder your ability to pay off the mortgage payments each month after you move into the house. Make sure that you pay off any debts that you can before you apply, and if you still have a debt such as a student loan, make sure that you show that you are on top of the payments with no issues.
4. Get on the electoral roll
When it comes to applying for a mortgage, lenders will perform extensive checks on your identity to ensure that you are indeed who you say you are. There are many ways in which a lender will check on who you are, and electoral roll is a great port of call. If you don’t usually vote in elections your name might not be on the roll, but this can be a small red flag for a lender and it could hinder your ability to get a mortgage. Add your name to the roll and also ensure that your address is updated on every important account you have including your driving license and passport.
5. Avoid unusual properties
Sometimes the problem you have with applying for a mortgage isn’t you, but instead is the property itself. When you apply for a mortgage, the lender will perform checks on the property to make sure that it is safe and is a viable investment for them. If you come to apply for a mortgage this year it is important to consider the fact that the property you choose can have an impact on the application. Make sure that you choose a regular home or building and avoid risky or unusual properties.
6. Be prepared with all documents
There are a lot of documents you will need to bring with you to a mortgage meeting, and these are:
- Bank statements for the last 3 months
- Proof of Address
- Mortgage in Principle
To make the process of applying for a mortgage go smoother and swiftly, it is important for you to bring all of these to the initial meeting with your mortgage advisor. This will allow them to go through your documents and earnings to ensure that you can feasibly afford to buy a home with the funds you currently have. This isn’t anything for you to worry about and in fact, a mortgage advisor will do all that they can to help you through the process of buying your first home.
7. Show self-employed earnings
The mortgage application process can become a little bit more complex when you work for yourself rather than for another person or company. When self-employed, you need to be able to prove your earnings to the lender as well as prove that your income is steady and stable. A lender is always less likely to accept an application for your mortgage if you are a freelancer because this income is hard to prove as stable. Make sure to gather invoices and reports of your earnings to provide solid proof that you are financially stable when applying for the mortgage.
8. Look up mortgages
Getting a mortgage for the first time can be a daunting prospect and it is understandable that you would want to take the advice of a mortgage advisor to help you through. However, it is also a good idea to familiarize yourself with mortgages as a whole and get to know what types are out there for you. Look at different types of mortgages which are available in your local area and by doing this, you should soon be able to make a decision or narrow down your options ready for a meeting with your lender.
9. Shop around
Although you might want to accept the first deal which is handed to you, it is important that you shop around and look for other offers too. Not all mortgages are made equally, and in fact, there are vast differences between what different lenders may be prepared to lend you for a house. Makes sure to put your details into a few different mortgage in principle forms to see what the best lending value you can find is.
10. Practice good habits for 3 months
When meeting with a mortgage advisor, one of the things you have to do is show your earnings and spending for the last 3 months to ensure that you can afford to pay for your mortgage. If you know that you will soon be applying for a mortgage, take 3 months without stupid spending, and show that you are able to afford your home. This part of the mortgage application can sometimes trip people up and ruin their chances, but if you make sure to get ahead of the game this will allow you to make a positive impression.
Applying for a mortgage can be a challenge at times, but with these helpful tips and advice, we hope you will be accepted for your application with no issues or hiccups.