The mortgage market has been greatly changed since the Financial Crisis and many banks and building societies are more cautious about their lending. This means that when you approach a mortgage adviser about getting a mortgage, there are often hurdles in the way. But by preparing with a few tips beforehand, you can make the process easier and increase your chances of being approved for a mortgage.
Understand your credit report
Your credit report is one of the best places to start and you should understand what it says. Most IFA’s will go through the details with you but before you start the process and approach mortgage brokers, it pays to have an understanding of the basics. Low credit reports can seriously reduce the chance of getting a mortgage or mean you get one that costs you more money. Use two or three of the top companies to get a copy of your report for a well-rounded view.
Have a good deposit ready
House prices in Cheltenham are healthy so this means you need to have a good deposit ready to place down on the mortgage and increase your chances. The days of zero deposit mortgages are long gone but companies do take deposits from a wide range of sources including loans, gifts, savings and obviously profit from a previous property.
Know what you can afford
When you visit a company for independent mortgage advice, they will walk through the process of income and expenditure with you. But by having this information ready beforehand, it will save a lot of time and give you some ideas about how much you can afford before you begin the process. Most mortgage companies today place emphasis on what you can pay while still living and paying other bills rather than simply providing a mortgage and letting you worry about paying it and still being able to eat, as they did in times past.
Clear debts where possible
One of the top reasons that people are refused mortgages is that they have too much debt already. Mortgage companies all have their own ideas about how much they accept in terms of monthly outcome spent on debts but most seem to be around the 35-45% of your monthly gross income. If you are paying more than this in debts, they may be reluctant to give you a mortgage or may only offer a poorer deal that costs you more.
Keep employed during the process
While sometimes there’s nothing you can do if you find yourself out of work, it is important to try and keep employed during the process. This means don’t look to change jobs, reduce hours or make any other alterations that could affect your income while applying for a mortgage as this could put the mortgage provider off from giving you the loan. While unexpected unemployed is of course not your fault, you should do what you can to stay in work while you are seeking to take a new mortgage.