Getting a mortgage can seem like a difficult task but with a few handy tips and tricks you can dramatically improve your odds and potentially get you better deals.
Improving your financial status, means you’ll become more attractive to lenders and this means you’ll be open to more mortgage offers which could reduce interest rates and save you money.
Lender’s criteria for acceptance
Each lender adopts different methods for approving your mortgage. If your credit history is blemish free, you have a good income, your current outgoings are low and you have a healthy deposit you’ll obviously be more attractive to lenders who will want to compete for your business.
This is because, you are less risk, show discipline in managing your finances and will be in a better position to maintain your mortgage payments.
If you have a bad credit rating and existing debts, this wont rule you out of getting a mortgage, it may just mean you are higher risk, which may result in less options.
Don’t try and hide past problems. All lenders will check your credit report and this will highlight any defaults you have made in the past. It will also make you look bad that you tried to be dishonest.
Your credit report includes information such as electoral roll information, court records (CCJs), fraud data and account data. This means any loan payments, mobile phone contracts and other utilities will be recorded and any payments you missed, shown.
Get in there first and check your credit report
There are many free online apps you can use to check your credit report. You can check and see where you stand and look to correct blemishes, by establishing a pattern of consistent payments.
Close inactive accounts
If you have accounts that are active but you no longer in use, it may be beneficial to close them. Having access to too much credit could lower your chances of getting a good mortgage.
That said, having good, long standing accounts with blemish free histories will show you are disciplined and good at resisting temptation of getting into debt.
Each lender is different, but a general rule of thumb is that if you have lots of cards with available credit, you may be better off closing them. Your mortgage broker will advise accordingly.
It’s not just about you
If you are applying with your partner, don’t forget that even though your credit might be great, theirs might be poor and this will also be taken into consideration.
If anyone did get into a bad financial situation, lenders may ask for more detail about this so ensure you have an explanation and again, be honest.
Points make prizes
When you apply for a mortgage, lenders will review your status and previous history to position you for approval. Think of it like a points system which is weighted to certain areas.
Typically the most important areas looked at are your payment history and then current amounts you owe, so improving these areas will bring the most benefit.
Debt to income ratio
In simple terms, money in vs money out. Take a look at what you earn, and what you spend. Reducing what you spend and increasing what you earn will improve your debt to income ratio.
This ratio is looked at by lenders and each will have their own percentage that they are comfortable lending on. If you think you are struggling here, you could improve this by reducing your outgoings or even taking on extra work.
This is often simpler than you might think. A few changes like eating out less or cancelling that gym membership you never use can make a difference. It all adds up.
Get a good mortgage broker
A good mortgage broker will explain this to you in detail and help you get on the right track to fixing any poor history. Not only that, because they have access to many more lenders, they’ll be able to find a lender that fits your financial position.
It can be a complex process and even things like your age can affect your mortgage; some lenders may offer less options than others.
For example, if you are over 50 you are more likely to have health problems and your income be start to decrease. The term of your mortgage may also need to be shortened.
Leave it all to us
Whatever your situation, Yorkshire Rose Mortgages can help find you the perfect mortgage and take away all the hassle and stress. Get in touch for a no-oligation chat and we’ll get you started.