7 tips for getting your mortgage application approved
Applying for a mortgage, whether you’re buying a residential property or investing in a buy-to-let, can be daunting. For those without experience of the process, the number of financial factors taken into consideration is often overwhelming. However, if you ensure your finances are prepared in advance, you are much more likely to achieve the mortgage level you require.
We’ve put together a list of our top seven tips to help you sail through the mortgage application process and purchase the property you’ve always wanted:
1. Tackling your credit score
In order to assess your ability to pay back a mortgage, lenders will consider your credit score. This report will list any credit cards, loans, mortgages and overdrafts you have paid within the past six years. You’re able to check your credit score for free, which gives you the opportunity to address any errors on your credit file. In addition, you should use this opportunity to close all inactive accounts that could appear on your credit score.
Your mortgage lender will also want to check your identity via the electoral roll. Your credit report will inform the lender whether or not you’re on the electoral roll, so it’s important to ensure you are signed up before you apply.
2. Reducing your debts
As part of this process, you should reduce your debts. Not only will your debts appear on your credit score, but they will also reflect poorly on you when lenders consider your ability to pay back your mortgage. As a result, you could be offered a smaller sum or have your application rejected.
When assessing your finances, lenders will look at your bank statements from the past few months. To ensure you get the best result possible, you should spend a few months reducing debts and being careful with spending, so that your bank account reflects your finances favourably.
3. Speaking to a mortgage advisor
If you’re unfamiliar with mortgage applications it could be beneficial to speak to a mortgage advisor. As an experienced financial professional, a mortgage advisor will be able to help you assess your finances and ensure they’re put forward in the best possible light. The process can be daunting, particularly when you’re unsure of what aspects of your finances need to be presented in your application.
In addition, a mortgage advisor can help you on a long-term basis, so you can continue to assess your financial situation and plan ahead as the end of your contract approaches. Frequent re-evaluation of mortgages will allow you to get the best possible deal and invest your money wisely.
4. Getting a mortgage in principle
A mortgage in principle is an agreement from a lender that shows you what you would be able to secure now if you were to apply. While it still requires you to present a lender with your financial details, it puts you in the perfect position to apply once you have chosen your property. In addition, most lenders will look more favourably on your official application if you have secured a mortgage in principle.
5. Preparing your deposit
A good deposit could be the key to securing a mortgage agreement. But no matter how large your deposit may be, it won’t be taken seriously if you’re unable to provide proof. Whether you have saved for many months or received a gift from loved ones, you will need official documentation to prove it exists before your application will be accepted.
If your deposit has been loaned to you, remember that your monthly repayments will be considered by the lender. Make sure you’re in a position to pay back the loan as this will be taken into account when the mortgage amount is being decided by the lender.
6. Budget for extra fees
You need to demonstrate to your mortgage lender that you are financially prepared for all costs, including solicitor fees and other application costs. Many mortgage applications involve additional expenses, so factor these in when sorting your funding to ensure you do not leave yourself in a difficult financial position should your application be approved.
7. Prepare for buy-to-let mortgages
Applying for a buy-to-let mortgage, whether you’re hoping to mortgage a residential buy-to-let or a holiday let, follows the same process as a normal mortgage application. However, there are aspects of the application that may be harder for you to complete if you have little experience of the market.
For example, many lenders will be less likely to approve an application for an inexperienced buy-to-let investor without a proven history in the area. However, with the help of an experienced mortgage advisor, you will be able to negotiate any unfamiliar hurdles and ensure your finances are portrayed in the best possible light.
Follow the seven tips above and you’ll be well on your way to getting your mortgage approved, and one step closer to your next house purchase.