From paperwork and percentages to get your property, it all gets you one step closer to having your own home. All you have to do is survive the mortgage application process.
This is how you do it.
You shoot, you score
Your credit score is an important cog in the mortgage application process. The better your credit score, the better chance you have at getting a more attractive loan, which means more money in your bank account at the end of the process.
Debit not debts
Using a credit card from time to time and paying a monthly loan payment on a car or a phone helps boost your score by showing that you can be relied on to repay any outstanding loans.
But lenders don’t take kindly to big debts, or missed payments. So try and reduce what you owe and get your payments on track for at least 6 months before applying.
Money, money, money
It makes the world go round and gets you a mortgage so take a close look at your budget before applying for it.
It’s not just the deposit you have to think about. You need to be able to afford the loan you want to take out so knowing how much you can realistically repay both your mortgage and other household costs each month is vital.
How do you like your rates in the morning?
Knowing what you kind of mortgage you want will take research, but it’ll help get you a great deal:
There are a number of options available, but perhaps the most common are:
- Fixed-rate: where the rate doesn’t change and you pay the same every month
- Variable-rate: where the interest you pay can increase or decrease at any point
If you want peace of mind of paying the same amount each month then a fixed-rate deal offers this. If you want to potentially pay less variable is a good option although bear in mind this could swing the other way and you’ll need to be financially prepared to pay more if the rates rise.
Other options are available and you can discuss these with a broker or lender.
Deposit size matters
The bigger your deposit, the less you have to loan. A bigger deposit also gets you access to the best rates and means lower monthly repayments.
The minimum for a deposit is usually 5% of the cost of the property, although this may vary from lender to lender.
Documentation will be your life when applying for a mortgage, so being organised will make it easier. All of these need to have the correct personal information on them. Double check everything or it’ll mean delays in your application:
- 3 months’ bank statements
- 3 months' payslips
- Most recent P60
- SA302 Tax Return if you’re self-employed.
Over and out-goings
Mortgage lenders will want to see what’s coming into your current account and what’s going out, everything from household bills to insurance policies, living costs like childcare, entertainment and travel expenses. So try and not be to wasteful in the months leading up to applying.
Get a broker so you don’t go broke
A professional mortgage broker can be a lifeline if you’re finding the whole process tricky. They’ll be able to advise you on the right mortgage deal for you, what you’re eligible for or help you with how much you can borrow.
Try our broker matching service and we’ll find a broker who’s best suited to you.
Houses to homes
Make sure you know what you want when looking at places to buy. From a location in a good school district and work, or if you want to be able to park your car in the garage, have an idea of what you want in your home that you’re putting all this work in for.
When looking at properties it’s best to get a few opinions from a family member and a professional surveyor. They’ll be able to tell you if your home is structurally sound or if there’s are unseen damage. Spot it beforehand and it’s the current owner’s problem, not yours.
Once you’ve put an offer on the place you want and it’s been accepted by the person selling, you then need to put in your formal mortgage application for a loan.
The mortgage lenders will go through your application to see how risky it would be to lend you money, taking into account all the things mentioned above from deposit, credit score and income.
Yay or nay?
Not getting approved by your mortgage lender might feel like a body blow, but there are steps you can take to improve your chances next time, such as getting a mortgage broker if you didn’t have one, reducing any debt or saving more to get a more attractive deposit.
If you get approved, you’ll receive an offer on the loan which will take about 30 days to come through. It might take longer if your application’s a more complicated
The final hurdle
The very last step is the legal exchange, where your conveyancer transfers funds to the property seller, and you’re officially a homeowner.