Applying for a mortgage is a stressful process, especially when you include the years of savings that the average person will need to do in order to afford a deposit. The hard work doesn’t stop there either, even once you’ve got the money for a deposit, the application process isn’t exactly forgiving.
To help minimise stress and make sure your mortgage application is successful, here are some things to be aware of if you’re trying to get a mortgage.
Red Flags on Bank Statements
Lenders will ask to look at bank statements that date back at least 3 months, so you’ll want to make sure that your spending behaviour has been especially responsible during that time, ideally longer.
Certain things within those bank statements can raise red flags. The lenders want to see that you can afford your loan and that you are wise with your spending.
Things like gambling and betting transactions can affect your approval chances. This is especially true if it’s a frequent occurrence and the bets are large. You should be fine with regular stuff like playing the lottery, but if your gambling looks like a problem that could affect future affordability, you could be rejected.
If you think you have an addiction or it has become a problem that is affecting your finances and your personal life, seek help and advice from professionals.
You should also make sure that you and your friends refrain from sending money transfers to each other with silly or rude names as the reference, as this could also complicate your application.
Your credit score is one of the biggest things that affects your chances of mortgage success. The higher your score, the better your approval rate and the more mortgages you will be offered. The lower your score, the more limited your options and the harder it will be to get approved.
Though your best bet is to take the time to work on improving your credit, it’s not impossible to get a mortgage with bad credit.
Specialist lenders may be able to approve you for an adverse credit mortgage, as the criteria between lenders can vary. A specialist mortgage broker may be able to find you the right lender.
Getting a mortgage with poor credit may mean that you’ll need to put down a higher deposit and that the mortgage you do get will have a high interest rate.
Making sure all your personal information is accurate is vital. Check that everything you fill out on forms is correct and that you don’t fall victim to typos or autofill mistakes. Admin errors can happen on the lender’s side too, so if you don’t get approved, ask them why.
Don’t guess or assume anything either. For things like your salary, ensure you write down the exact number.
It also helps to verify whether you are registered to vote or not, and if so, confirm that you are registered at the right address, as this is how lenders identify you.
Lack of Stability
To get lenders on your side, you need to show that you and your income are stable. Even positive things like getting a new job with a higher salary may not be so positive when applying for a mortgage at the same time.
It may be safer to stay in your current role whilst looking for a mortgage and refrain from the new job search until after you’ve secured the loan.
Lenders want to see a stable job and income that will allow you to afford the monthly repayments. With a new job, you’ll need to pass the probation period and prove it is a permanent and secure role.
Similarly, it may be more difficult to get approved for a mortgage loan if you are registered as “Self-employed”. You’ll need to prove your business is going smoothly and that you are expecting regular income. You might be able to find specialist lenders for the self-employed.
Getting The Right Lender
You could just be asking the wrong lender. Consult with a mortgage advisor who can find lenders with criteria that are more closely suited to you. If your credit score is poor, a specialist advisor may have the contacts that you need.