Property News

Whether you’re a first-time buyer, you’re remortgaging or you’re moving home, the process of getting your mortgage accepted is always nerve-wracking. There are so many factors that can influence your eligibility, from credit score and how long you’ve been in your current job to whether you have any debts and the size of your deposit. 

But the good news is that there are things you can do to improve your chances of success – here are a few helpful tips to make the mortgage application process easier to manage. 

Check your credit score

Your credit score plays an important role in getting a mortgage accepted. It’s what lenders use when reviewing your application and if your score is less than desirable, it could impact whether your mortgage is approved. You can get a copy of your report from agencies such as Experian or Equifax, which will give you a clearer view of your financial health. 

If the outlook isn’t as positive as you’d like, there are things you can do to improve your score, such as making sure you’re on the electoral roll, closing down any credit card accounts you no longer use and making sure that all your bills are paid on time to avoid untimely payments being flagged. 

If you spot any errors, you can request for these to be amended by contacting the company in question. For example, just one late payment can drop your score by 130 points, so any mistakes should be rectified as a priority to bring your score up to what it should be. 

Prove your income

Your lender will need to see evidence of your salary, so having this prepared in advance will speed up the process and make it easier to prove to your lender that you can afford the repayments. If you’re employed, you’ll need to show evidence of pay slips and in some circumstances a P60 form from your employer which shows a summary of your pay and the amount of tax that’s been deducted. But if you’re self-employed, you’ll need to provide much more evidence as lenders can view this as a riskier application. 

In most cases, you’ll need three years of SA302 forms from HMRC or your full accounts from the past three years to provide proof of your income stability and to show that you’re capable of making the mortgage repayments every month. 

Since the process is trickier it can help to work with a mortgage broker who specialises in mortgages for contractors or self-employed individuals. Mortgage brokers have access to lenders who accept such applications more easily depending upon circumstances. Including whether you have a bad credit score, recent applications to other forms of debt and any dispute statements on your credit report.

You’ll also need three months’ worth of bank statements and payslips to prove how much is coming in and going out of your account every month. If you’re preparing to move, it can help to be more mindful of your spending and avoid taking on any new debts or credit accounts. 

Keep things stable

Too much moving around, whether it’s homes, jobs or switching bank accounts numerous times in a short space of time, can have a negative impact. So, aim for stability in the lead up to your mortgage application. Constant changes showing up on your records can indicate that you’re a riskier applicant and this could harm your chances of being accepted for a mortgage. The same can be said of numerous credit applications – these will remain on your account for up to a year so too many searches may have a negative impact on your application. 

Boost your deposit

The more money you can put down as a deposit, the better your chances will be of being accepted. This can be challenging for many people, since the deposit is often the hindrance to getting on the property ladder, but lenders tend to reserve their best rates for applicants with bigger deposits, so you will benefit from lower monthly payments if you can put down more initially. 

Saving for a deposit is difficult, especially if you’re renting at the time, as a large chunk of your wages every month will be going towards rent and utilities. But if you can put extra towards your deposit, it will pay off in the long run. There are government schemes available to help people maximise their savings, but you could also try cutting back on expenses wherever possible each month in the build up to your application.

Clear outstanding debts

Any debt will go against you in terms of your affordability for a mortgage, so the more you can clear before applying, the better. Lenders don’t only look at your outstanding debt but also how much debt you could accumulate if you utilised untouched debts, such as maxing out your credit card limit or overdrafts. 

So be mindful of this and close down accounts you’re not using, clear as many debts as you can and bring limits down so that these figures aren’t taken into account. Ultimately, any debt repayments you have increase your outgoings, and you should be aiming to reduce those as much as possible. 

Cut financial ties with ex-partners

Something that many people don’t realise is that any past joint accounts or debts that you hold with someone else can have a negative impact on your own credit score if they’re still open. These financial links might be a joint bank account, a loan or credit cards where both of your names are on the contract documents. 

These details will appear on your credit report, but if you note anything like this, it’s worth closing these accounts and cutting ties so that the only accounts impacting your credit score are your own. 

Final thoughts

The goal with any mortgage application is to show to potential lenders that you’re a safe investment. You want to show that you’re capable of paying bills on time, you have a stable income and that you’re not overstretching yourself every month with debts and expenses. Consider the factors that will impact your eligibility and how you can position yourself in a positive light in preparation for your financial assessment.