Purchasing a property is one of the biggest financial commitments you’ll likely ever make. Unless you’re a cash buyer, you’ll probably need a mortgage! This involves many moving parts and a lot of assessment. Drawing from our professional experience, this article aims to guide you through the steps you can take to improve your chances of approval.
Step 1: Speak to a Mortgage Broker
At this stage, you may not yet know what you don’t know!
When applying for a mortgage, many factors come into play, including your credit score, deposit amount, income, expenses, employment history, and the specific property you want to purchase, to name just a few.
A mortgage broker’s primary role is to understand these unique factors, along with your preferences, to advise you on your options and make recommendations tailored to your situation. Here at The Mortgage Pod, our team of expert Mortgage Advisers takes the time to understand you and your quirks, guiding you through the entire buying journey. Click here to get started.
When Is the Best Time to Speak to a Mortgage Broker?
It’s never too early to chat with a mortgage broker, even if you’re not quite ready to buy. We know that the more prepared you are, the smoother the process will be. Taking time now to understand the steps, assess your finances, and gather info will set you up for success when you’re ready to make your move. Starting early means you’ll be confident and ready when the time comes. Get started today.
Step 2: Save a Larger Deposit
While it’s possible to buy a property with a zero deposit, a larger deposit gives you more flexibility and options. Typically, mortgages require at least a5% deposit, but a bigger deposit—whether from savings, a gift, or a loan—opens up more choices with lenders and products. It also shows financial stability, potentially leading to better loan terms and interest rates. Whenever possible, aim for a higher deposit to maximize your mortgage options.
Step 3: Check and Improve Your Credit Report
Your credit report shows how you manage various financial products, including credit cards, loans, mortgages, overdrafts, phone contracts, utility bills, and buy-now-pay-later agreements. Lenders will review both your credit score and report when you apply for a mortgage. We recommend checking your credit report first to spot any issues or discrepancies. Addressing these before applying can improve your chances of approval. Your credit report, both positive and negative, directly affects the lender’s decision.
What Can I Do to Improve My Credit Score Before Applying for a Mortgage?
- Register on the electoral roll: Lenders use this for identity verification. Not being registered can hurt your chances, so sign up with your local council ASAP.
- Ensure everything is up to date: Make sure all payments are timely and your credit report is accurate. Unpaid bills or errors can create a negative impression with lenders.
- Tidy up your accounts: Close unused or inactive accounts. Excessive available credit can signal a risk to lenders, and old accounts may contain outdated info or pose fraud risks.
Step 4: Limit New Credit Applications
When preparing to apply for a mortgage, be mindful that lenders will conduct thorough credit checks. Avoid making non-essential credit applications, like for a car, as multiple hard credit searches in a short time can hurt your credit score. Too many searches may make lenders think you’re seeking unsecured debt, which could reduce your chances of approval. Focus on maintaining a strong credit profile during the mortgage process.
Step 5: Cut Old Financial Links
If you’ve had joint accounts, mortgages, or loans in the past, these associations may still appear on your credit report. Even if it’s been years since you last used a joint account, the financial history of the other person can affect your mortgage application. Lenders may also consider their credit profile, including any missed payments, which could impact your approval, even if their current score is good.
Step 6: Reduce or Tidy Up Your Outgoings
When applying for a mortgage, you’ll need to submit your last three months’ bank statements. Lenders will review these to assess your income, deposits, and financial management, helping them make informed decisions about your application.
Questions an underwriter might consider:
- Are you relying on your overdraft to pay your bills?
- Are there any indications of habitual behaviour, such as excessive gambling transactions?
- Are direct debits being returned?
- Are there regular, unexplained cash transactions?
- Can this person afford to pay their new mortgage every month? Is there sufficient net disposable income (NDI)?
These are some examples of the questions an underwriter will consider, all of which may trigger further scrutiny if they are unsatisfied with their conclusion.
Step 7: Prepare the Correct Paperwork
The presentation and packaging of your mortgage application are just as important as the mortgage application itself. Mortgage lenders will need to see clear, concise information in a structured format. One of the best ways you can increase your chances of mortgage approval and speed up the application process is to provide the required documents in the specified format as soon as they are requested.
How Can The Mortgage Pod Improve My Chances of Getting a Mortgage?
With many years of experience, our team of expert mortgage brokers knows that attention to detail and early preparation can be the key to securing a mortgage. We’ll support you every step of the way, from preparation to receiving your keys. Just reach out and say hello!
FAQ
What is the best way to check my credit score, before applying for a mortgage?
At The Mortgage Pod, we recommend CheckMyFile, as this will show data from 3 different credit references agency’s. Visit this page for more information.
Will a bigger deposit increase my chances of mortgage approval?
Yes, while many mortgage options are available with as little as a 5% deposit, a larger deposit can increase your chances of approval. A higher deposit reduces the lender’s perceived risk, therefore increasing your chances.
I been declined for a mortgage application, what should I do?
Firstly, don’t panic. Reach out to a professional mortgage broker, as there’s a good chance you still have options. Mortgage applications can be declined for various reasons, and an experienced broker will help you explore alternative solutions for your circumstances.
How long does it take to improve credit score for a mortgage?
Theres not set rule here, but often it won’t be an overnight fix. There are many specific steps you can take you improve your score, contact our team today for a help making a bespoke plan.
