You’ve decided to move house and you might even have a location in mind. Now you need to get yourself a mortgage offer ‘in principle’ so that when you do find your dream home you are able to move fast. To maximise the chances of obtaining the loan you need on the best terms possible, there are several things you should consider doing. They are;
- Check your credit score. Third party providers like Equifax or Experian can help you here. The credit score they provide is what the mortgage providers will see when they check so it’s best to have a look first. There may be issues you can resolve before making an application or, indeed, errors you can have amended.
- Get your paperwork in place. As part of the Mortgage Market Review, lenders are now required to make much greater efforts to establish that you will be able to repay the money you are borrowing. This means they will be asking about your income and expenditure and they’ll want proof. This means getting together any historic P60s and maybe the last six months wage slips. It’s also worth putting together your household budget by using previous utility bills and grocery spending. Doing this now will give you a better idea of what you can afford and where you might be able to make savings. If you are self-employed, you will need detailed information from your accountant and/or the taxman.
- Don’t move job! In most cases, a sideways move into a new job is frowned upon by lenders as it says ‘instability’ to them. If you are considering a change of employment you might want to delay it a little while.
- Raid the piggy bank. The greater the deposit, the better chance you will have to obtain a larger mortgage of favourable terms. This all boils down to what is called Loan to Value. The smaller the loan as a percentage of your home’s value, the less risk there is for the lender. Scrape together the biggest deposit you can afford, remembering to leave a little in reserve for that rainy day.
- Don’t keep changing your application. Chopping and changing your application will delay approval and may result in an offer being withdrawn or revised. Remember, you are looking for a financial offer ‘in principle’ until your dream property comes along.
- Reduce other debt. This might mean paying off credit cards or car loans. Keep your spending under control and try to reduce or pay off other debt. It’s good to have credit cards and a reliable history of debt repayment, but the smaller the current debt the better when applying for a new mortgage.
Finally, as with all things complicated, a little professional advice is worth having. Please contact our Bracknell office or speak to our preffered independent mortgage advisor, who will be happy to talk through your options.