For almost all of us the biggest financial commitment you make is taking out a mortgage and you would look for the best deal. It requires a proper research plus a number of factors to get the best deal which you are looking for. Additionally, you can do a couple of things to increase your chances of cracking the deal for the mortgage.
We share with you 10 tips from the experts that would help you in getting the mortgage application accepted.
Top 10 tips for you:
Tip #1. Start with a budget
The first thing to do is sit down and consolidate your money to have a budget for your mortgage. This will help you to know the exact figures for how much you need to borrow for the mortgage and cover other costs as well. Keep in mind that the monthly mortgage payments are directly proportional to the money you borrow plus the interest rates. A mortgage calculator tool will give you an estimate to plan your budget well.
Tip #2. Big deposits, great chances
A simple phenomenon would work for anyone: Bigger the deposits, greater chances of getting the mortgage you desire. Once you have a lump sum amount ready for the deposit, you can have bigger choices of mortgages to choose from. Lenders in general, reserve best deals for people with colossal deposits which in turn would lower the monthly mortgage payments as well.
Tip #3. Strictly “No” debts!
Lenders refrain themselves to crack a deal if you are in debts. The last thing your lender would want to see in the mortgage application is that you owe a lot of money on credit cards or you’ve outstanding loans. Try to reduce the debts before you plan to submit a mortgage application as it will give the lender the impression of how you handle your money responsibly.
Tip #4. Don’t switch jobs until you crack the deal
This is one of the things that your lender would notice before they give you a mortgage: the duration of your current job (if you’ve worked for a decent length of time). If you’re planning to switch jobs then wait until you have the mortgage in hand.
Tip #5. Get your proof of income ready
In general, mortgage lenders would require you to show them your proof of income so that they are sure of getting back the monthly payments. So, keep your P60 forms ready that you get from your employer every year. This form will have the summary of your pay along with tax deducted. The lender may as well ask you to provide bank statements and pay slips of 3 months.
Tip #6. Don’t forget your accounts if you’re self-employed
If you’re self-employed then getting a mortgage will not be a piece of cake and in you’re planning to go for it all alone then it can be tricky as well. The lender would want to have proof that you can keep up the repayments without any hassle. So, keep your SA302 form relating to 3 years from HMRC ready for the lenders to see or maybe your full account details for the last 3 years. If you fail to do so, then your mortgage application might not be approved.
Tip #7. Never chop or change your application
As rightly stated by David Hollingsworth:
“Changing the figures further down the line will mean the offer being reassessed which, although may not necessarily be a problem, could add unnecessary delay.”
If you’ve started your mortgage application, then never think about chopping or changing the figures in your application as it would create chances of your application to be rejected.
Tip #8. Don’t neglect your credit score
Before you apply for a mortgage, you need to check your credit score held by credit reference agencies like Experian or Equifax. With this, you can see what lenders would see when they review your application. You can boost your score if you’re not satisfied with your credit score.
Tip #9. How about buying with someone else?
If you’re not sure that you can arrange for a good deposit amount then you can look for a partner to invest for the mortgage. Although it will increase your chances of securing the mortgage, but keep the terms clear with your partner before you plan for buying with someone else.
Tip #10. Get help if needed!
To know about mortgage terms, how much to borrow etc. getting help from a mortgage broker would be a wise move. They can assist in market research; help you in the application process and getting best mortgage deals.
There are lots of factors involved before getting your application for mortgage selected. Hope the above tips help you to prepare yourself before submitting an application for the mortgage.
James Paul is a personal finance blogger who writes at Basic Finance Care covering everything about personal finance management to frugal living to debt management related topics. When he is not writing, you can find him teaching his twins new things.