#TuesdayTips – preparing yourself for applying for a mortgage
Posted 20 October 2015 by Keith Osborne
Looking for a mortgage is arguably the least exciting part of your search for a new home, but for most of us, it’s an essential part of the buying process.
Since the Mortgage Market Review (MMR), which came into effect in 2014 to bring in standards for responsible mortgage lending, lenders have had to tighten up their procedures considerably. The knock-on effect for borrowers is that their finances have to be in first-class shape when they approach a lender for a home loan, as every detail of their application and financial status can come under scrutiny.
The specialists at Experian CreditExpert have come up with six great tips for homebuyers about to ask for a mortgage, which will help clear the path for a smooth application...
Know what you have to spend
Consider what funds you can draw together to form your deposit. The size of your deposit will often dictate how much you face in terms of interest rates and lender fees.
Do your research
Use mortgage calculators and comparison websites or speak to a mortgage adviser to find out where the best deals are and what type of mortgage will suit your circumstances. Work out what you can afford to borrow and repay, both now and if rates rise by 1%, 2% or more.
Scrutinise your spending
Scrutinising your last few months’ outgoings carefully will help you understand exactly where your money is going. Prepare now by building good habits like increasing the amount you save, clearing overdrafts and cutting back on discretionary spending to ensure you close out the month with even a small surplus.
Check your credit report
As soon as you make the decision to buy, check your credit report with all three credit reference agencies. Ensure everything is accurate and up to date and reflects your current circumstances – e.g. that all of your open credit accounts are recorded and that any old accounts have been marked as “settled”. If you spot anything you believe to be inaccurate, contact the relevant credit reference agency and ask them to investigate the entry with the lender.
Room for improvement
If your credit report has areas for improvement, make a plan to get it into shape well before making your mortgage application. There are a number of steps you can take, including: ensuring you’re registered on the Electoral Roll; paying down outstanding balances to less than 50% of your limit; paying off more than the minimum repayments on your credit cards each month and making sure never to miss a repayment.
Don’t fall at the last hurdle
Right before you make your application, take time to do some last-minute checks. Check your credit report again to make sure nothing has changed and everything is accurate right before you apply. Check the exact way your address and other personal details appear on your credit report. Small inaccuracies could see your application turned down, so don’t overlook the details.
Look out for our tips for the latest interiors trends next Tuesday on Whathouse.com