Many people will be considering getting on the property ladder in the not too distant future and looking to apply for a mortgage to help realise what is a great achievement. There are a number of different factors you should be thinking about before deciding to file an application for a mortgage.
It is also important to remember that the criteria lenders will look for, differ between first and second charge mortgages. Find out more
There are various criteria that mortgage lenders assess when deciding to approve or decline an application, so it is important to fulfil as many as possible to help your chances of acceptance for the mortgage you need.
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.
The Mortgage Lending Criteria
Mortgage lenders will assess you against eligibility criteria to decide whether to accept your mortgage application. Whilst the exact criteria will vary from lender to lender, as will the specific mortgage product that you have applied for, typical things a lender will consider include:
- Your total monthly outgoings
- Your credit score
- You and potentially your partner’s if you are intending to apply for a joint mortgage employment status (for example, are one of you fully employed and the other self-employed)
- The deposit you have already saved
- Their mortgage policy rules
- Your spending habits
- Your salary
- The amount you want to borrow for the mortgage
Research Different Mortgage Products
Don’t make hasty decisions when looking to get on the property ladder. Rather, take your time looking at the mortgage products available on the market, as few products are the same, with some offering better benefits than others, according to your circumstances. You can do this by deciding to check out one of the many reputable comparison websites, that can help breakdown what each mortgage product offers you from each lender.
Important to consider is whether you fall into the category of being considered as self-employed. For example, if you are a freelancer working under a UK umbrella company as part of your employment arrangements, there are specific products out there, tailored for self-employed workers.
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.
Get A Few Quotes
Once you have narrowed down the mortgage lenders you are interested in making an application with, be sure to get a few different quotes from them before making a final decision. This can help you get the best deal.
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 if you know you are not 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.
Plan Ahead
When applying for a mortgage, it is wise to prepare as much as possible before filing in your 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 the mortgage when it comes to making your application. The more you have saved for a mortgage, the greater the chance that a lender will approve you for a home loan in the future.
Another way to prepare ensuring you have cleared outstanding debts and make it a top priority that any loans or credit you have available (personal loans, store cards, or credit cards) 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 have.
They will need to see evidence that you would be able to keep up with monthly mortgage repayments, and not run into financial difficulty by having a home loan.
