Any lender will want to see proof of your income before they even think about offering you a mortgage, so it makes sense to get your house in order well before you apply for one.
That’s especially true given the current climate of rising costs and interest rates, when securing a home loan can seem a daunting prospect.
What’s more, whether or not you’re accepted will depend on so many different things, from the size of loan you’re after to your credit rating, savings, employment status and any existing debts. (Equally, things change, so that a previously successful application with a particular lender doesn’t necessarily mean you’ll be accepted now.)
But the good news is there are many things you can do to maximise your chances of being offered the widest possible range of deals at the best rates.
Check out your credit report before your prospective lender
Credit reports detail your financial history from the past six years, covering everything from credit cards and loans to overdrafts and mortgages plus some utility bills.
You can check your rating with the UK’s three credit reference agencies – Equifax, Experian and TransUnion – free of charge.
While a poor credit rating doesn’t necessarily bar you from securing a home loan, it certainly won’t help. Aim to get yours in shape before you apply, and correct any inaccuracies on your score which any of the agencies has made.
Get yourself on the electoral role
It’s not easy to be approved for a home loan if you haven’t registered on the UK’s electoral roll, since this information is used when lenders are verifying your identity. You can get yourself added in a few weeks, plus it’s free.
Wind up any accounts which may be old or inactive
It’s probably worth closing any accounts you’re not using. Keeping these active could make you vulnerable to fraud, and affect your application. Don’t just cut up the plastic – contact the bank or other provider.
Pay everything on time
Missed payments can really count against you, so don’t skip bills, even once. Pay everything by direct debit.
Don’t go into overdraft
If you’re permanently in the red, this clearly doesn’t look great. Indeed, some lenders won’t accept those who’ve used an overdraft facility within the last few months.
Speed things up with paperwork in order
From banks statements to payslips, tax returns and proof of address, there’s a fair bit of paperwork to get together. It helps to send this all together, and to allow enough time for original documents to arrive if your prospective lender won’t accept electronic versions.
Enhance your credit rating by paying rent
If you always pay your rent on time, either as a social housing tenant or private renter, find out more about the schemes allowing you to enhance your credit ratings because of this. The longer you’re signed up to these, the more you’ll feel the benefit.
Go easy on spending
If you cut back on the nice things like new clothes, holidays and meals out for a while before applying, it may make life less fun, but you will be providing evidence of breathing space – so when lenders check bank statements, they’ll see some slack in case rates rise again.
Don’t apply for other credit at the same time
If you can, don’t apply for credit during the few months ahead of your mortgage application. It could have an adverse impact – some even advise not applying for credit during the six months pre-application.
Manage your available credit with care
If you have too much credit available, lenders might believe you could spend it all, and so get into more debt. But if you do have debts, lenders like these to total less than half of your available credit. So it’s a delicate balancing act.
Finally, if your application is turned down, don’t immediately reapply with another lender. Too many applications could hinder your credit score.
Check your credit file again – and ask the lender why they couldn’t accept your application.
Talk to us
With a mortgage broker, you can benefit from expert guidance and advice, save time and maximise the chances of a successful home loan application. Our advisers provide honest, friendly advice and can help whether you’re a first-time buyer, are looking to move or want a buy-to-let mortgage.
Get in touch today to learn more.