Are you considering getting on the property ladder in the not too distant future and looking to apply for a mortgage?
There are a number of different factors you should be thinking about before deciding to complete your application. With so much money at stake (according to a Bank of England report conducted in 2015, the average mortgage a UK homeowner will take out is £85,000) it could well be the difference between you being able to purchase a home or not.
Mortgage lending criteria
Mortgage lenders will be assessing you against their eligibility criteria to decide whether to accept your application. Whilst the exact criteria will vary from lender to lender and between the specific mortgage product that you have applied for, there are some more common aspects a lender will be more likely to look at:
- Your total monthly outgoings.
- Your credit score.
- Your employment status (for example, are you working for an umbrella company or are you ‘traditionally employed?’)
- General affordability.
- The deposit size you have already saved.
- Their mortgage policy rules.
- Your spending habits.
- Your salary.
- The amount you want to borrow for a mortgage.
Research mortgage products available
Don’t make any hasty decisions when looking to get on the property ladder; Take your time looking at all of the mortgage products available on the market, as no two products are certain to be the same, with some offering better benefits than others, according to your own personal circumstances.
You can do this by deciding to check out one of the many reputable comparison websites, that can help breakdown what each product offers you from each lender. You also have the option to access the services of a mortgage broker, who can provide you with their expertise and knowledge as to what would be the best option for you to go for. This can also be less time-consuming than looking at mortgage products on an individual basis.
Make sure you get quotes
Once you have narrowed down the mortgage lenders you are interested in making an application with, be sure to get at least three different quotes from them before making a final choice. This will help you to be sure that you are getting the best deal for you.
Are you on the electoral register?
One of the easiest ways to prepare for a mortgage application and increase your chances of being approved is being in the electoral register, or at least verifying that your details are correct and that you are still on it. Providers will be looking for verification of your address and identity as part of one their first steps in deciding whether to approve you or not.
If you are unsure or know you aren’t on it, simply go to the GOV.UK website to sort this out. You can register to be on electoral roll online and the whole process will take you less than ten minutes, and it is well worth doing if you are looking to get on the property ladder.
When applying for a mortgage, it would be wise to prepare as much as possible before filing an application. This means at least four to six months before applying for a mortgage carefully looking at your spending habits. This can help you to decide as to whether there are areas of spending you could cut down on, so that you can have more saved up for a deposit for a mortgage when it comes to making an application.
That said, cutting back doesn’t mean you can’t enjoy some of life’s luxuries within reason or live healthily. For example, fruit, vegetables and even many UK juice cleanses can be done on quite tight budgets meaning you simply have to adjust rather than remove these things from your life to help your mortgage prospects.
The more you have already saved for a mortgage, the greater the chance that a lender will be likely to approve you for a home loan in the future.
Another way to prepare that you should take into consideration is making sure that you have cleared any outstanding debt, and make it a top priority that any loans or credit you have available (personal loans, store cards, or credit cards that you have) have been paid off, as a critical factor in deciding to approve or decline you for a mortgage by providers will be how much debt you already owe. They will need to see evidence that you would be able to keep up with monthly repayments, and not run into financial difficulty by having a home loan.