Follow these Top Tip to Prepare yourself financially for a Mortgage Application
The process of applying for a mortgage can be daunting, but if you approach it with knowledge about your current financial situation and are fully prepared for what they will be looking for then it will be much more likely that your application will be accepted. The rules have changed with mortgage applications the last one I did was two years ago and it was extremely time consuming and fairly painful. All I wanted to do was change the term of our mortgage and 2 hours later after examining every cost going through my bank account it was finally agreed.
The first thing to say is that you will most likely need a good amount of time to prepare for your mortgage application. You will need to prepare your financial health well in advance of any mortgage application. I mean at least a year, particularly if you find any issues that need to be repaired.
Check your credit score
A really important part of the mortgage process is your credit score. This needs to be in order for the application to be accepted. This can be checked for free at the big credit agencies Equifax and Experian. If your credit score (a rating between 0 and 999) looks low (the agency will give you a traffic light rating if its high or low), then you need to order your credit report. All the agencies have a free 30-day trial of the detailed credit report, just order it and then cancel before the 30 days is up.
If you spot any errors, which is fairly common call up the agencies to get them removed. Last time I checked there was loan repayments from an ex-partner whom I used to live with. It’s easy to get these errors removed and thus see an immediate improvement to your credit score. Also do the following
- Ensure all bills are paid on time for a year at least
- Any credit card repayments pay more than the minimum payment
- Ensure you are registered on the electoral register, an essential.
- Try to minimise the amount of credit applications within this pre-application time and definitely no credit applications in the 3 months before the application.
- Don’t have too much available credit and if you have too much then shut the cards down. Maybe only have 2 to 3 accounts or ask to have credit limits reduced.
- Apply for an Icount Prepaid MasterCard to help prove regular payment to credit agencies, this isn’t a credit card.
Prepare your bank account
Part of the application process will include a detailed review of your bank account. You will need to ensure that there is nothing suspicious within your accounts like gambling transactions. Believe me I have been through it many times and they question everything from coffee, to childcare to restaurants.
Cut back on your spending to prove that you can live comfortably within your means and maybe demonstrate that you can save through regular transfers to a savings account. And ensure that you don’t use your overdraft facility.
Good luck with your applications.
This was a collaborative post.