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How to Put Yourself in the Best Position When Applying for a Mortgage

Posted 13 August 2018 by Nick Parkhouse

If you’re buying a new home, you should be ‘mortgage ready’. Find out how to put yourself in the best position to buy...

According to UK finance figures there were 365,000 first-time buyers in the UK in 2017. Considering that there’s strong competition for properties in certain parts of the UK, it can pay to be properly prepared if you’re looking to buy a home.

Putting yourself in a great position will help you to secure the home of your dreams. But what steps can you take to make sure you’re fully prepared to proceed with your purchase? Keep reading for our complete guide to getting ‘mortgage ready’.

Check your credit record

When you apply for a mortgage, your lender will carry out a credit check. They will access the information that a credit reference agency holds on you in order to help them determine whether you are a good risk.

Your credit file contains information such as:

  • Your address history
  • Whether you are on the electoral register
  • Details of any credit cards, loans or other borrowing you have
  • How you have managed this borrowing
  • Whether you have missed any payments
  • Whether you have any defaults or County Court Judgements.

To get ‘mortgage ready’ it is a good idea to check your own credit history. You can apply for a credit report from the three credit reference agencies in the UK: Experian, Equifax and Callcredit. This report will show you whether you have any adverse issues on your file that may harm your chances of applying for a mortgage.

If there are errors on your credit file you have time to get these corrected. If you know what is on your file you can also take steps to improve your credit record. For example, you may be able to get yourself on the electoral register.

Read our guide to improving your credit score.

Work out what type of mortgage you want

If you’re thinking of getting a new mortgage, it can help to have a think about what type of mortgage you want, and what type of interest rate you’re looking for.

There are three main types of mortgage:

  • Repayment (or ‘capital and interest’) – your monthly repayment includes some interest and some of the amount you borrowed. Your mortgage balance will reduce over the term of the loan.
  • Interest only – your monthly repayment consists of just the interest on the amount that you borrow. Your mortgage balance doesn’t decrease, and you will still owe the same amount you borrowed at the end of the term.
  • Offset mortgage – you link your mortgage to your current or savings accounts. Any savings you have offset your mortgage balance, helping you to pay less interest and repay your mortgage faster.

Read more about mortgages and how they work.

You will also need to have a think about the type of mortgage deal you want:

  • Fixed rate – guarantees your mortgage payments at a fixed level for a specified period of time.
  • Tracker rate – follows the Bank of England Base rate. Your repayments will rise and fall as general interest rates change.
  • Variable rate – your rate is linked to your lender’s Standard Variable Rate (SVR). Your repayments will change as and when your lender changes their SVR.

Read about the pros and cons of different mortgage types.

Prepare all your documents

Whichever type of mortgage you choose, your lender will want to see a range of documents to support your application. You will have to prove your identity, your income, and that the new mortgage is affordable to you.

To get ‘mortgage ready’, make sure you prepare all the documents that your lender may need to see:

  • ID, such as your passport or driving licence
  • Proof of address, such as a utility bill or bank statement dated within the last 3 months
  • Payslips from the last 3 months
  • Your last P60, especially if you want a lender to take bonuses or commission into account
  • Your SA302 form and 3 years’ accounts if you’re self-employed
  • Bank statements for the last 6 months
  • Proof of any other income that you receive, such as maintenance or benefits.

Seek expert advice

If you’re a first-time buyer, then there’s lots to consider when you take out a mortgage. Even if you have held a mortgage before, then you may still need advice to find the right deal from the thousands available in the market.

As it’s likely to be your largest financial commitment, it can really pay to take expert advice. A mortgage broker can help you to find the right deal for you, and a lender who will accept your application. Read more about what a mortgage broker can do for you.

Alternatively, you can speak to an adviser in a High Street bank or building society. While these can generally only advise you on the bank’s own range of products, they can still help you to find the most appropriate deal. Here are 10 questions to ask your mortgage lender.

Get a mortgage agreement in principle

When you’re buying a property, it can help your chances if the estate agent or vendor knows that you’re in a position to move quickly.

A mortgage agreement in principle shows that you’ve spoken to a lender and that your mortgage has been provisionally agreed. Sometimes called a ‘Decision in Principle’ (DIP), a Mortgage Promise or a Lending Certificate, an agreement in principle takes into account:

  • Your credit score – a lender will access your credit file as part of this process
  • Affordability – the lender will take your income and outgoings into account to determine what you can borrow
  • The lender’s specific underwriting criteria.

If you can show that your mortgage has been agreed in principle, then it puts you in a great place when you come to make an offer on a property. Read more about getting a mortgage in principle.


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