Applying for a mortgage can be one of the most stressful parts of buying a home. We take a look at how to maximise the chances of your chosen lender saying yes.
Obtaining a mortgage in principle before you make an offer on a property is a good way of showing the seller that you are a serious buyer and that you are ready to proceed. Your lender will let you know how much you can borrow and it could mean that your application goes through more quickly when the time comes. Follow these seven steps to make sure you’re ready.
1. How much can you afford?
You should take a realistic look at how much you can afford, both by way of mortgage payments and deposit. Take into account all of your future expenses such as Council Tax and utilities and do not take on more than you will be able to cope with. You should also look at whether you will be able to afford your mortgage payments in the event that they increase.
If you instruct a solicitor early on, they will also be able to tell you how much it will cost to buy a property, to include Stamp Duty and other expenses, so that you can budget for these fees.
2. Have your deposit ready
Lenders generally offer better rates to those with larger deposits available. Decide whether you need to save more and, if so, have a look at budgeting so that you can make regular savings. If you are struggling to find the right mortgage offer, an independent mortgage broker may be able to help.
The government offers savings schemes that may help, including the Help to Buy scheme and the lifetime ISA. Help to Buy will allow you to purchase a new build home with just a 5% deposit, while the lifetime ISA allows you to save up to £4,000 each year, with the government adding a 25% bonus of up to £1,000.
3. Look at your debts and credit score
It is worth reducing your debts as far as possible and checking your credit score, as your lender will be looking at these. If you find incorrect information included on your credit rating, then you should ask for this to be amended as it could mean that you will not be able to get the best possible mortgage deal.
4. Register on the electoral roll
Your lender will also check whether you are registered on the electoral roll, so try and ensure you have done this.
5. Income
Lenders like to see evidence of reliable income, with six months’ employment or two years’ self-employed accounts a minimum requirement.
6. Put your documents together
Start putting together all of the information you will need as soon as possible to avoid unnecessary delays. This will include payslips, accounts and identification. Mortgage lenders will be able to let you have a list of the paperwork they require so that you can make a start on this.
7. Check if your lender has restrictions on properties
Lenders are reluctant to lend against certain types of property, for example, freehold flats or flats situated higher than a 10th floor. Knowing what they will accept means that you won’t waste time looking at unsuitable homes.
If you would like to speak to one of our expert property lawyers, ring us on 0333 305 5189 or email us at info@lpropertylawyers.co.uk
