Taking out a home mortgage is likely to be the most significant financial commitment you’ll ever make. You need to understand various factors that affect your eligibility when applying for a mortgage. These include the credit score, current debt, self-employment, and your deposit amount. Follow our top nine tips for getting promising mortgage quotes.
1. Your credit score matters
Get a copy of your credit report from a credit agency such as Experian or Equifax before demanding a mortgage. As a result, you will find the information that lenders will notice when reviewing your application form.
You can take various simple actions to improve your financial status if your credit status is not good. For example, consider you are on the electoral roll and close a credit card account that is no longer in use.
2. The starting point is your sums
Start thinking and work out your budget before applying for a mortgage. You must ensure that you have enough cash to pay for the home purchase and spare money to cover all associated costs. Our guide, “How to calculate the cost of buying your first home,” will help you calculate these costs.
Your monthly mortgage payment will depend on money (and for how long) you intend to borrow and lenders’ interest rates. Our mortgage calculator helps you calculate the total credit amount granted by lending institutions.
3. You’ll need proof of income
Financing companies may require you to provide proof of income, so prepare the P60 form your employer gives you every year. This form contains a summary of your salary, income, and paid taxes.
You may also be requested to give three months’ bank statements and receipts so that creditors can analyze your investment amount and expenses.
4. Or accounts if you’re self-employed
As a self-employed person, applying for a mortgage can be challenging, especially when you decide to proceed alone. Generally, the lender will request an HMRC for the SA302 form or your transaction histories and invoices from the past three years. You are unlikely to be accepted for a mortgage if you do not possess these records.
5. The bigger the deposit, the better it is
You will be offered various mortgages options if you finance a larger down payment. More so, lenders will reserve their best interest rates for borrowers who made large initial deposits. Since you are eligible for better deals, you will also benefit from lower monthly payments.
6. Buying with someone else can be easier
Try to consider shopping with other people; if you don’t want to make a substantial deposit. It can increase your chances of getting a decent mortgage, especially if your credit is good and your income is relatively higher. But remember, this is a big commitment, so you’ll need to think and create a plan for future deals.
7. Don’t shorten or change your application
Once you have started your mortgage application, don’t mess with the application form and change numbers, as this may delay your property-purchase process.
David Hollingsworth said, “Changing the figures further down the line will mean the offer being reassessed; although this is not necessarily a problem, it may cause unnecessary delays.”
8. Debts don’t help for getting a mortgage
When you apply for a mortgage, the last thing any prospective lender will analyze is: whether you owe a load of money on credit cards or you’ve got outstanding loans. Therefore, it is crucial to reduce your debt as it will help lenders demonstrate that you will manage your payments responsibly and carefully handle your future transactions.
9. It can pay to get help
It is best to get help from a suitable mortgage broker; if you have trouble finding a suitable mortgage transaction or don’t know what you are entitled to or how much to borrow. They research the market for you and help you complete the application process, so you don’t have to work alone. Visit our website RateChecker.com or call at 855 505 1738 seven days a week for more updates.