Preparing for your Mortgage Application
Preparation is everything in getting a successful mortgage application! A few simple ‘housekeeping’ steps can actually make a massive difference between a lender looking favourably on your application or declining it!
Whilst we will always be working with you and for you, a bit of advance preparation on your behalf is always a good idea and will help matters no end!
These are the steps that you really need to start thinking about at least 6 months prior to coming to see us to arrange your next Mortgage deal…yes, seriously, 6 months in advance!
Make Sure you are on the Electoral Roll
Lenders will either Credit Score or Credit Check you at the application stage. Non-appearance on the Electoral Roll is already going to be marks against you, so check with your local authority if you are showing at your current address and if not register without delay!
Use any Overdraft Facility Prudently
Overdrafts are well known as one of the cheapest forms of borrowing and sadly, many abuse this knowledge by virtually living in overdraft territory all month every month! This needless to say is not something that will excite a lender about your credit worthiness. What it does show is that you are probably living beyond your means. Dipping in and out of your overdraft towards the end of a month is acceptable but it is always best just to use your overdraft as an emergency reserve!
Try to avoid gambling
OK…most people will have the occasional flutter on the Boat Race or the Grand National which is not a problem. What is a problem is a bank statement that is cluttered up with payments to Bookies, Bingo and on line casinos etc. Lenders do not like this!
Ensure that your Credit File is accurate
We recommend that clients obtain a copy of their ‘Check My File’ Credit Report (see the link in the menu bar on our web site). This report we believe to be the most comprehensive report available as it provides data from the four main Credit Reference Agencies - Equifax, Experian, Call Credit and Crediva. We will ALWAYS ask for sight of your credit file prior to your mortgage appointment so we can advise on any action you may need to take or any potential problems that we can see before meeting with you.
Do NOT take on any new credit!
If you are intending on buying or re-mortgaging PLEASE think very carefully before taking on ANY new unsecured credit agreement! Last year I saw three First Time buyers whom I was unable to help, and despite the fact they all had reasonable incomes they also all had recently purchased nice shiny new cars on finance. When nearly 10% of your gross annual income is paying for a car, lenders tend to shy away! Of course, it is not just cars it is any loan or credit card.
…and talking of Credit Cards
Having four or five ‘empty’ Credit Cards with potential of £10,000 on each card may look good…it is not! Lenders will view this as you having the potential to take on a new mortgage and then rush out and blow £50,000 on your credit cards creating a potential monthly repayment of £1,500. Not a good move! Contact your card providers and look to reduce the maximum borrowing to £2-3,000 and then only use the cards in an absolute emergency.
If you have a deposit being gifted
More and more First Time Buyers are being gifted their deposit or part of it from parents or grandparents. There is of course no problem with this but we do need you to follow a few simple guidelines. We will need the donor to sign a letter that we or the lender will provide to confirm that it is a gift absolute and that the donor will have no future interest in the property. We will also need at least six months bank statements evidencing that the funds have either built up over time or were released from equity in their property or investments. It may sound overkill, but this is to comply with money laundering regulations. We and the lender, need to see where the money has come from to meet our obligations. No evidence and quite simply No mortgage!
Not a problem! Just please try to get your tax return submitted by the 5th October each year! I can hear the screams now…” but we have until the 31st January to submit returns for the previous year!” You are of course correct. However, the majority of lenders will require your returns submitted by the 5th October i.e. 6 months after the end of the tax year. So, if you are looking to re-mortgage in November 2019 then most lenders will expect your April 2019 tax return to have been submitted by then. Don’t forget…you will need your accountant to obtain the last three years tax year overviews and tax year calculations from HMRC to submit with your application.
Please try and get EVERYTHING registered to where you live! I often come across clients who still have bank statements sent to Mum and Dads house or even worse their driving licence showing a previous address! Neither will help you obtain a mortgage and having the wrong address on your driving licence could land you with a fine of up to £1,000!
Above all else, if you are unsure about anything relating to your proposed mortgage a quick phone call to 01206 252025 and I will do my level best to answer your query.
Our initial mortgage consultations and quotes are free with no obligation to you. If we act on your instructions to apply for a mortgage, we charge a broker fee for arranging and processing the mortgage for you. The fee will be dependent on your circumstances but will not exceed £495. This fee is only payable when we submit a mortgage application to the lender. Your home may be repossessed if you do not keep up repayments on your mortgage.