As a first time buyer, thinking about getting a mortgage can feel like a daunting task, especially if you are worried you might not be accepted. But there are many ways to improve your chances of getting a mortgage and making yourself an attractive prospect to lenders.
Here are our five top tips to improving your chances of getting a mortgage.
1. Check your credit file and correct any errors
Your credit file and score will give lenders an idea of how good a risk you represent for making repayments. It will show how you have repaid debts over the past six years – such as credit cards, loans, overdrafts, some utilities and even mobile phone bills.
Checking your credit file and score is really easy. You can sign up to services such as Experian, Clearscore or Credit Karma to gain monthly updates and track your history. You’ll pay for some of these credit services, others will be free and some may have a free initial period. Be careful with these as you have to remember to cancel them!
If you have had any missed payments in the past, this affects your credit score and makes you less attractive to lenders.
You also need to make sure all the information on your credit file is correct – or at least question any areas which you think may be marked in error. Any errors should be brought up with the creditors in question to see if it can be rectified.
2. Make sure you are on the electoral roll
It is crucial that you are registered to vote, even if you have a great credit score. A lender may not accept you if you do not appear on the electoral roll.
Lenders also sometimes use electoral roll data to check your identity, so check with your local council to make sure you are registered – it is free and really simple to do.
If you do not have a UK or EU passport, you can put a note on your credit file to say that you will provide other proofs of ID to lenders.
3. Disassociate yourself from your ex – their credit score can affect yours
If you have any past financial links with another person such as an ex-partner, you need to make sure you cut those ties. Any credit score implication they have may bring your score down.
If you had a joint account with old flat mates, for example, or joint credit cards or loans with your ex, you should write to the credit agencies and ask for a notice of ‘disassociation.’
4. Strike a balance between your available credit and debt
If you have too much available credit, lenders may think you are at risk of suddenly racking up a large amount of debt on your credit cards. And that’s not all – they also won’t look too kindly on your profile if you are close to maxing out your credit limit.
As a rule of thumb, try and find a balance somewhere in the middle if you do need to have rolling credit. For example, whatever your combined credit limits are, try to keep your rolling debt to less than half of this if you can.
This is not an exact science, though, as lenders may take differing views. The most important thing is that you never miss a payment – and pay as much off as you realistically can each month.
5. Budget, save and cut down on your spending before you apply
Lenders are going to go into a lot of detail when assessing whether you are going to be a good mortgage customer. They may want to see three-months’ worth of bank statements before you apply to ‘stress test’ your finances.
In the months before you apply, it makes sense to tighten the purse strings a little. Moving costs can be high – and there may be a few unexpected costs along the way.
Not only that, if a lender sees that you have been splashing out before buying a home, you become a little less attractive to them.
Get your finances and credit score well in order before you start. Speaking to a mortgage adviser early will ensure you know exactly what to expect before you approach any lender – and they may spot any potential problems you may occur ahead of applying. At Linear, you can have a no-obligation consultation with an adviser at any time – even if you aren’t planning to buy at this stage you’ll get helpful and friendly advice on what to do now, and what to expect later.