Applying for a mortgage can be stressful, particularly if you are worried about your application being rejected. To counter these concerns, there are steps you can take to get ready for the application process.
The first step is getting educated on the different steps in the process so you know what to expect. Next, you can anticipate the steps in the process and be ready for whatever the mortgage process throws at you.
What does a mortgage ready applicant look like? First things first, they have a good grip on their finances. Their monthly expenses are easily managed and they aren’t making any large purchases – particularly on credit.
Another factor of the mortgage ready is someone who has a financial buffer in place. It’s tempting to throw everything into your deposit to increase your chances of securing a good rate, but leaving yourself without a sufficient buffer to cover additional expenses could leave you feeling stressed.
And finally, the mortgage ready are well-educated on the steps in the process. They are also not afraid to ask questions at any stage in the process, so they can adapt to changes and not feel overwhelmed. Here are our top tips for getting mortgage ready:
Check your current loans and debts and close any unused credit accounts. While large credit limits might help your credit score, they can make some lenders nervous, as there is the risk you could increase your liabilities after you have been approved for a mortgage.
Paying off debts will help to make you a more attractive option for lenders. You should also keep a close eye on your bank statements, as you will need to share these with your lender. They will be looking for evidence of irresponsible behaviour, such as gambling or borrowing money at the end of the month.
Paying back payday loan companies or debt collection companies can also reflect poorly on your application. Avoid services like Klarna if possible as these can cause significant damage to your credit score.
You can see what lenders see by signing up to the various credit checking companies. This will help you to spot any potential issues and fix them before you submit your application. If there are mistakes on your credit score, make sure you fix these before you apply.
One of the simplest changes you can make to your credit report is making sure that you are on the electoral register at your current address. This will streamline the process of confirming your identity.
The time before you apply for a mortgage is not the time to be looking for a new job. Lenders will look for evidence that you are in stable employment to help influence their decision about your application.
If you are concerned you might be made redundant from your role, consider looking for a new job and passing the probationary period before you apply for a mortgage. If anything changes about your employment status during the application process, this could derail your plans.
You might have a target in mind for saving for your deposit, but don’t stop once you hit this target. If you still have the capacity in your budget to save money every month, continue putting some aside to either boost your deposit amount, or to save for unexpected expenses.
Moving house can be very expensive with lots of additional costs to think about, including survey fees, conveyancing, estate agent fees and removal fees. If you continue saving, you can either increase your deposit amount, or you can ease the burden on your finances in the coming months. Either way, this looks like very responsible behaviour for the lender.
If you want to start looking for your dream home and put in an offer with confidence, you could apply for an agreement in principle. This is a condensed mortgage application that states that the lender is very likely to grant your application. This lasts for around 90 days, which is usually plenty of time to find your dream home.
Once you have found a home you like, you can then apply for your full mortgage, which will have a much more extensive approval process. Some estate agents won’t start showing homes to individuals unless they have an agreement in principle in place. This is common in very popular areas where homes are in high demand.
Being prepared for the mortgage application process can help to streamline your experience and reduce your stress levels. Simple steps like checking your credit score, making sure you’re on the electoral roll and paying down your debts can make you look like a much better option for lenders.