Getting a mortgage can seem like an impossible task, but it is one of the most important financial decisions a person can make in their life. Although getting a mortgage is daunting, it definitely isn’t impossible. You will need to appear as financially attractive as possible to potential lenders if you want to get the best deal possible. The following tips outline what you can do to improve your odds when applying for a mortgage.
You won’t fit every lender’s criteria
Each lender has its own method to decide whether or not they want to lend to you. If you fit their criteria, it is likely you will be accepted. If you are not what they view as ideal, then you are more likely to get rejected.
However, it is possible that you will be placed somewhere in the middle. In these cases, you will be assessed on several factors that include:
- The size of the loan that 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.
If you do pass, it means that you are more likely that you will get the mortgage deal, but it isn’t guaranteed.
Check your credit score before a lender does
When applying for a mortgage, you need to convince lenders that you are financially stable to repay the mortgage. One way they assess this is by searching your credit report(s) to find out if you have a good repayment history. This will include your past credit cards, loans, overdrafts, mortgages, mobile phone and utility payments for all accounts that were open over the past six years.
You can now obtain your credit report for free, therefore it is worth checking yours beforehand. By doing this, you can see where your credit profile is strong and what aspects need improving.
Correct any credit score errors
If your credit information is incorrect, you need to correct it. You should first check if the error is on your credit file held with other agencies before consulting with the lender. If this course of action doesn’t work, the free Financial Ombudsman Service could intervene and order any corrections to be made.
You MUST register to vote
It is almost impossible to get a mortgage if you aren’t on the electoral roll, even if you have a perfect credit score. Lenders use data from the electoral roll in identity checks, so it is important that you are registered to vote.
Your ex-partner’s credit score can impact yours
If you are financially linked to another person but are now separated, then you need to remove this link. In order to do so, you will need to contact credit agencies and request a notice of “disassociation”. Any late payments or misdemeanours they they’ve committed will reflect poorly on you, so it is always worth checking to see if their credit history is affecting yours.
ALWAYS pay your bills on time
All missed payments are recorded on your credit file; therefore, you must keep up repayments on all your outgoings. Defaults count against you for at least a year and they’ll remain on your file for the next six years. To ensure that all payments are met on time, set up a direct debit on all of your accounts.