Boost your mortgage chances

Here are my top tips on how to boost your chances of getting the deal you want.

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Don't expect every lender to fancy you

Lender's scorecard will be based on several factors, such as:

  • The size of loan you want to take out
  • How much you've saved as a deposit
  • Your employment status and income
  • Your credit rating
  • Your outgoings
  • Your existing debt

If you pass, it means it's more likely to lend to you, but nothing is guaranteed.

Check your credit score before they do

You need to convince lenders that you've got the financial discipline required to pay back your mortgage. One way they investigate this is by searching your credit records to find out if you've a good repayment history.

Your credit file lists your past credit cards, loans, overdrafts, mortgages and even mobile phone and some utility payments, for all accounts that were open over the past six years.

How to get it for free

Credit rating agencies' top end service is 'credit monitoring', which costs around '£180 a year. They offer free month-long trials but would require you to set up a direct debit or regular credit card payment


Correct credit score errors

If your credit file info's wrong, you have a right to do something about it - either having the error corrected or, at the very least, having your say.

Your first step should be to check if the error is on your credit file held with other agencies

Register to vote or you'll have no chance

This is a dealbreaker. While you can have a perfect credit score without being on the electoral roll, it's still ALMOST impossible to get a mortgage without it. Lenders use electoral roll data in identity checks (to ensure you are who you say you are, and live where you say you live and that you're not laundering money).


Your ex partner's score can wreck yours

If you're financially linked to someone else (which only happens when you apply for joint credit, such as a bank account, mortgage or loan) but you're now separated or have nothing to do with them, then de-link yourself.

If not, any late payments or misdemeanour they've committed will reflect badly on you. Write to the credit agencies and ask for a notice of 'disassociation'.

Carefully manage your available credit

This is all about how much credit you have available to spend on credit cards and overdrafts. It's the difference between your combined debit balances on your cards and bank accounts and your combined credit limits/overdraft limit.

You need to strike a balance between not having too much — as lenders may think you could rack up more debt by spending it all — and not getting too close to your limits, which makes it seem you're at the edge of your finances.

This is an art, not a science, and all lenders' views of how much credit you 'should' have differ. Try to stay below 50% in all cases.


Close old, inactive accounts or they can kill your application

If you're not using an account, it may be worth closing it. Leaving it open could not only be a fraud risk, but could also mean some of your details may need to be updated.

However, if applying for a mortgage, longer, stable credit relationships are a positive. So, if you've two credit cards, one recently opened and an older one, it's probably not worth closing the older one before the mortgage application as you could lose the credit score boost it gives you.

ALWAYS pay ALL your bills on time

It's obvious - so do it.

All missed payments count against you on your credit file, so it's vital to keep up all repayments on ALL your outgoings.

Defaults count against you for at least a year, and they'll stay on your file for the next six years. Miss just one mobile phone payment and it could be the difference between getting a mortgage and not.

Set up a direct debit on all accounts to make sure payments are made on time.

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Don't apply for credit shortly before a mortgage

Try to avoid applying for credit in the three months before getting a mortgage - it could hinder your score and lead to rejection. Some recommend at least a six-month gap, to be absolutely safe.
If you NEED to apply for credit, it's unlikely that one application will hurt all that much, provided it's affordable.
BUT - if it's a payday loan, some lenders will decline you for a mortgage if you've had one in the past year.

Cut back on spending before you make your mortgage move

Lenders will ask for a lot of detail about your outgoings and may even want to see bank statements to verify what you've told them. This is because new rules brought in in April 2014 mean the lender has to 'stress test' you.

Don't worry, it's checking you'd still afford your mortgage if rates went up to 6% or even 7%.

It also makes sense to live a little frugally in the run-up to buying your first home. Moving costs are high, so every penny you save means a bigger budget to meet unexpected costs.


Stay out of your overdraft

If you're constantly in your overdraft, this could be seen as living close to the edge of your finances, so avoid it if possible. In fact, some lenders may not tolerate you being in your overdraft at all in the last three months.

Sort your paperwork to speed things up

Lenders now have to see proof of your income before they can offer mortgages, so it makes sense to get your paperwork together in advance. Sending all the paperwork in one batch speeds up the process as it reduces the chances of your application being reviewed by more people.

Your lender may want to see any or all of:

  • Your last three months' bank statements
  • Your last three months' pay slips
  • Proof of bonuses/commission
  • Your latest P60 tax form (showing income and tax paid from each tax year)
  • Your last three years' accounts or tax returns (SA302's)
  • Proof of deposits (eg, savings account statements)
  • ID documents (usually a passport)
  • Proof of address (eg, utility bills or credit card bills)
  • A gift letter. If you're getting deposit help, the lender needs to know it is a gift (not a loan), and that the giver won't part own the home.

Test drive your mortgage chances

Once you've done all the steps above, your finances should be in great shape. To test this, speak to us to gain you a mortgage agreement in principle (AIP), offered by many lenders, is the acid test.

It's a conditional offer saying you may be accepted, based on a quick check of your income and, probably, your credit file. But it offers no guarantees & it's not compulsory. But for first-time buyers especially, it boosts estate agents' or sellers' confidence that you'll be able to complete the sale, so may up your chances of having an offer accepted.
Don't worry - just as it doesn't tie them in to lending to you, it doesn't mean you have to borrow from that lender if we spot a better deal further down the line.
Beware - too many of these checks in a short space of time could harm your credit rating if the lender does a credit check and marks it on your file. This could damage your mortgage application later on. Some lenders offer a 'soft' search option, which won't be visible to other lenders (but will show up to you).

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Your home may be repossessed if you do not keep up with mortgage payments.

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