A simples guide

Tips to maximise mortgage approval

Whether you’re taking the first steps towards owning your own home, remortgaging or moving house, waiting for that mortgage application approval can be a bit like waiting for exam results. Even if you think you’ve done all your homework, you’re never quite sure what the results might be. So to help you get the most out of your application, read our top tips for mortgage approval.

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Check your credit rating

You should always check yourself out before potential lenders do. A mortgage lender is trusting you enough to part with a very large amount of money so it’s fair enough that they want to make sure you’ve got the commitment, discipline and means to pay it back. The first stage of them doing that is to check your credit history.

There are three main credit reference agencies that all credit checks go through (Experian, Equifax and Call Compass) and it’s worth seeing what they’ve got on you. You can check your credit report for free at Experian (the largest of the three) and Equifax if you sign up to their free trial – just be sure to cancel it before they start charging. Credit Compass offer free checks at any time as long as you sign up. Don’t assume that the information these agencies have on you, is correct. Check for yourself and if you do see anything that’s wrong then you can ask for it to be reassessed.

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Remove yourself from undesirable associations

Make sure that any old financial links you have with exes or previous flatmates, are severed. If someone that you’re financially linked to has a dodgy credit history, it’ll damage your own score so cut old ties and make a clean break.

Be on the electoral roll

Lenders can be a suspicious bunch and they’ll use the electoral roll to check that you are who you say you are and they’ll also use it to check where you currently live. Being on the electoral roll is vital if you want to get a mortgage so if in doubt, check with your local council who’ll be able to help you if you’re not.

Give credit its due

Not all credit is bad. If you’ve got a good credit history – have never missed repayments, and manage your debts well, then it shows lenders that you’re sensible and disciplined about borrowing money. This makes you a more attractive candidate compared with someone who has no credit history at all. It might sound odd that never relying on credit could work against you, but lenders like to see evidence of good money management. If you’ve got no credit history, there’s nothing for them to base an opinion on.

But be sensible with the debts you do have

On the flip side, just because lenders like to see your skills at money management, it doesn’t mean you should start maxing out your credit cards. They key detail is in how you manage your debts – not how much you can juggle without your bills collapsing on you. As a general rule, if you want to take out a mortgage you should be using less than half of the credit that’s available to you. For example, if you have £5,000 worth of credit available then you should be using less than £2,500 of it. If you can, try and pay off any small outstanding debts you have to try and minimise what you owe.

Have some savings

Chances are, you’ll already have some money saved for a deposit if you’re buying for the first time but the more you can save – the better. As obvious as it sounds, the more money you have saved – the more favourable lenders will be towards your application. A bigger deposit will also open more doors for you in terms of better interest rate options.

Don’t apply for credit just before you apply for a mortgage

Take a break from borrowing before you apply for a mortgage. Each time you apply for credit, it’s noted on your credit file even if you don’t actually take it out. If lenders see that you’ve asked about credit lots of times just before you ask for a mortgage, they’ll start to wonder if you’re desperate for cash and it’ll set their alarm bells ringing.

Spend wisely

Spend only on what you really need. Lenders will ask you to provide several months’ worth of bank statements so they can see for themselves whether you have the means to meet your repayments. That means you may need to think twice about any weekly treats or expensive non essentials. But it’s a good opportunity to have a financial detox – so that gym membership bought with good intentions but has never been used – cancel it.

Sort it out

As well as detoxing your finances, you’ll need to straighten out your paperwork. Lenders will want to see evidence of your income and outgoings so you’ll probably be asked to provide three months’ worth of bank statements and payslips and your last P60. If you sort it out before you apply, it’ll save you from scrabbling around trying to remember where you stashed them.

Be accurate and honest

Always state your finances as accurately as possible. Don’t embellish or try and hide that expensive impulse buy – you’ll be found out and your lender might start thinking about what else you’ve hidden.

Choose a suitable property

Lenders don’t like surprises when it comes to mortgaging houses and they tend to be conservative in what they’ll approve an application for. So you might want to live in a grand design underground or on stilts but your mortgage lender probably won’t share your passion. You may also need to be careful about properties with certain types of tenure too – flying freeholds (where part of the property is built over land that doesn’t belong to it) or properties with short leaseholds might be off putting to some lenders.

Find your perfect match

Not all lenders are the same and approval criteria will differ from lender to lender. Think of your mortgage application as a pick ‘n’ mix selection, lenders will have a look and focus on the applications that take their fancy. If you’ve used the services of a mortgage broker or independent financial advisor, they’ll be able to steer you towards lenders who are likely to be more favourable to the type of borrower you are.

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Bank of mum and dad?

Getting help to boost your deposit or persuading a relative to be your guarantor can help your application too. The exact meaning of what being a guarantor entails will differ according to each lender so if this is a genuine option for you, then it’s always worth getting advice from your mortgage provider about what sort of commitment you’d need from your guarantor.

What’s next?

Now that you know how to maximise your chances of getting your application approved, you can start comparing the market for a mortgage to suit you – after all, why go round the houses when you’re already on the UK’s largest comparison site?

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