Getting a mortgage can seem like climbing Everest, especially with the cost of living crisis eating into your budget, but there are ways you can improve the odds. You’ll need to be as attractive as possible to lenders if you want to get the best mortgage deal – otherwise you face the prospect of only being accepted on more expensive rates.
1. Don’t expect every lender to fancy you
Each lender uses a different process to determine whether or not it wants to lend to you. You might be approved quickly if you meet the requirements of a lender. You have a higher likelihood of being rejected if you are far from perfect.
However, for those in the center, it’s more of a murky area, and the lender will base their scorecard on a number of variables, including:
- The size of the loan you want to take out. Are you looking to borrow £150,000, £200,000, £250,000, etc?
- How much you’ve saved as a deposit. The bigger your deposit, the less of a risk you’ll likely be seen as.
- Your employment status and income. Are you a permanent or temporary member of staff, a freelancer, self-employed?
- Your credit rating and history. More on this below in point two.
- Your outgoings. This is how you spend your money.
- Your existing debt. This could include credit card debt, student loan, etc.
If you pass, it means it’s more likely to lend to you but nothing is guaranteed.
Be aware that lenders’ requirements can change, as has been the case as a result of the cost of living issue. Therefore, even if you have previously been approved for a mortgage, you shouldn’t automatically assume that you will do so with the same lender in the future.
2. Then, get things in order
You’ll be able to see how you’re performing once you’ve started monitoring your credit report on a regular basis. With the help of the 3 credit bureaus, you can clear up any errors. Monitoring your score over time will show you how your score may alter if your debt-to-credit ratio is too high. Investigate potential identity fraud right away if you notice accounts that you didn’t open or addresses that aren’t yours.
3. Understand your loan options.
By learning about your loan options before you apply, you can make sure the lender you choose offers the best type of loan for you. Types of mortgage loans include the following:
- Fixed-rate mortgages
- Adjustable rate mortgages
- Government loans
- Construction loans
- Professional loans
4. Register to vote or your chances might be scuppered
This could be a deal-breaker. While it is possible to have excellent credit without being on the electoral roll, it is quite challenging to obtain a mortgage without it. In order to verify that you are who you say you are, that you live where you say you live, and that you are not laundering money, lenders conduct identity checks using information from electoral rolls.
If you’re on the electoral roll or not, your credit report will indicate it, but you can also check with your local council. Do this as soon as you can. Although it generally takes a month to add you, it can take longer in the late summer and early fall.
You can register for free to be placed on the electoral roll if you aren’t already. You can add a notice of correction to your file stating that you have additional proofs of address and identification you can provide lenders if you are not a UK, Irish, or EU national and so are unable to register to vote (assuming that you do).