Buying a new home can get relatively stress, especially if you are getting a mortgage. You should have carefully planned it out so that there are no unnecessary delays. This article will present a guide on how you can make a successful mortgage application.
You will be asked detailed questions regarding your budget
Mortgage lenders will want to ensure that you can afford a mortgage right now and also in the future when the interest rates may get higher. You will be asked questions regarding your income and outgoings on a monthly basis. They will want to see exactly where you spend the money you earn to determine your affordability.
What can you do to help speed the process?
It would be best if before approaching a mortgage broker or lender, break down how much you spend on a monthly basis and what is it spent on.
Documents which you should get handy
Mortgage lenders will go through your bank statements in detail and may ask for you to explain large or regular outgoings. Further, the mortgage lender will want to see evidence of income.
Therefore, it would help if got the following documents handy:
- Verification of your earnings – You should gather last 3 month’s pay slips, bank statements, previous P60. If you are self-employed, then you should get your previous self-assessment return handy.
- Financial Commitment – Do you have any financial commitments such as childcare cost? If so, then you get details of your outgoings.
- Proof of identification and current address
- Detail of your solicitor or licensed conveyancer
- Details of the estate agent
- Proof of deposit and evidence that it is a gift and not a loan.
How long will the mortgage application take?
Before the global pandemic, a mortgage application would typically take around a month. However, coronavirus has significantly impacted the mortgage industry. You should expect that it will take longer than usual.
Please see our article for further information regarding how long will your mortgage application take.
Top tips for making a successful mortgage application
- Deposit – You need to save for a deposit. The larger the deposit, the easier it will be for you to get a mortgage.
- Realistic amount – You should ask for a realistic amount. The lender will not only consider whether you can afford it currently, but also whether you can afford it later on in the future when the interest rates may be higher.
- Credit score – You should check your credit score a few months before you apply for a mortgage. This will give you time to resolve the red flags on your history. You can also take several steps to improve your credit score. For instance, register on the electoral roll, close any bank accounts that you no longer use, and update any incorrect information on the credit score report.
- Debts – You should reduce the amount of money you have borrowed before you apply for a mortgage. This will not only allow you to borrow a more considerable sum, but it will also demonstrate to the mortgage lender that you meet your financial commitments.
- Spending patterns – The mortgage lender will take a detailed look at our spending patterns. It would help if you were careful about what you are spending your money on. Payments to gambling companies or the use of payday loans will not impress the mortgage lender.
- Paperwork – The most important thing for you to do is to get your paperwork in order. By getting the documents handy beforehand, you will not only be able to avoid delays, but you can also spot any mistakes which may affect a mortgage lenders’ decision.
- Mortgage broker – Mortgage brokers can not only help you in finding the best deals; they can also give precious advice on a mortgage application and how to make it better given your circumstances. However, before you hire a mortgage broker, you should see our article on whether you need a mortgage broker.