Monday, February 20, 2017

How To Maximise Your Chances Of Getting A Mortgage

looking for mortgages
With property prices continuously rising, mortgage companies are constantly upping the requirements. Getting a mortgage is becoming increasingly harder, however there are ways to improve one’s chances of being accepted.

Save up as big a deposit as possible

Whilst there are some companies that only ask for small deposits of less than 5%, most of these mortgage schemes come with massive amounts of interest. Generally the bigger the deposit you lay down, the more likely you are of getting a decent mortgage. Be patient and keep saving – ideally until you can afford 30 - 40%. Schemes such as Help to Buy ISAs and the soon-to-be-introduced Lifetime ISA could make this saving process easier.

Pay off other debts

Mortgage lenders will take into account how much you already owe. If you’re already paying car loans, student loans, personal loans and other debts, you may find yourself being continuously turned down. Aim to try and pay off these debts first. A debt consolidation loan might be useful for putting all these debts in one place.

Take measures to lower your credit score

A bad credit score can damage your chances of getting any loan. Paying off debts is the easiest way to fix your score, but there are other ways to improve it too such as taking out a credit score building card. Getting on the electoral register can also help to strengthen your credit score, as can making sure all your cards and statements are under the same name and address (it may be best to get rid of any credit cards or accounts that you no longer use).

Shop around

Don’t settle for the first mortgage you can afford. Shopping around could save you thousands, plus you may be able to find companies more catered to your individual circumstances – for example, mortgages for commercial properties or self-build mortgages. There are lots of comparison sites that can help you to choose the right mortgage for you. Alternatively, you can pay for a broker such as BrokerCo to find the best deal for you. Both approaches have their advantages and disadvantages so bear this in mind.

Prepare all your documents

Mortgage lenders will need all kinds of documents from you to use as evidence including an up-to-date passport and a driving license containing your current address. You may have to include payslips for the last three months, as well as P60s from the last two years. Any other forms of income such as child benefits will also need to be proved with some form of documentation. A recent letter from a bank or utility company that proves your address may also be required. Gathering all of this can take some time, especially if a driving license or passport needs to be renewed, so allow yourself time before applying to a mortgage. If you’ve recently been moving address frequently, you may need to find somewhere to stay put for a while so that you can gather evidence of a permanent address.

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