As an Independent Mortgage Broker we deal with hundreds of mortgage applications a year. Here are our insider tips for ensuring that your mortgage application is successful.
1. Make sure that you work your numbers carefully
Take the time to sit down and go through your figures carefully using bank statements. Quite often lenders will request three months of these as they are a “blueprint” to the way that you run your life. Mortgage affordability and not equity is the all-important consideration of lenders.
If you are looking for that super low interest rate, expect to have to put in a deposit of at least 25%. Do your best to get all interested parties to help, including bank of Mum and Dad. It is perfectly acceptable to most lenders, provided the money is a non-returnable gift, maybe an advance on an inheritance?
3. Obtain a copy of your Personal Credit File.
All lenders will carry out a search of your personal financial information held by one or more of the Licensed Credit Reference Agencies (CRAs).
This search will be used to decide if you represent an acceptable credit risk within a lender’s criteria. These days, recent missed payments and County court Judgments at any loan to value (LTV) are likely to be a road to nowhere as far as a mortgage application is concerned.
Take time to go through your credit file and ensure that all of the information on the file belongs to you.
ID theft (that’s where someone masquerades as you, obtains credit in your name, runs off with the money and leaves you to hold the baby) is becoming increasingly common. As far as a lender is concerned the debt belongs to you, until you can prove otherwise!
Whatever you do, don’t trust your creditors in terms of the information that they register about you on file. Mistakes happen regularly. If you believe there is a mistake, dispute it with the debt provider and make sure that they inform the Credit Reference Agencies of their mistake if you are proved right.
At the other end of the spectrum a mortgage application can fail if an applicant does not have enough credit information on file for a mortgage lender to assess whether or not they will make payments!
If your credit file is somewhat empty, you can improve a credit rating by getting some credit account information on the credit file. Mobile phone contracts are always a great start, as they are credit accounts and as such are registered on your credit file. They are also increasingly active in registering CCJs against people who default on monthly payments, so do ensure that if you change tariff/phone plan that any debt on your old plan is cleared. Similarly if you change address, make sure your phone provider knows.
If you rent a property, Sky or Virgin contracts are credit and therefore the conduct of the account will be found on your personal credit file. A Bank overdraft becomes credit when overdrawn and is registered on your file. NB Some banks only register defaulted overdrafts, so check with your bank.
4. Whatever you do make sure that you declare all of your outstanding credit commitments, including 0% accounts, catalogue accounts and any Buy Now Pay Later agreements, even if you have not yet started making payments.
5. Take a photocopy of any Mortgage application and keep it.
Make sure that you complete any application yourself with guidance from your Independent Mortgage Broker. Lenders share information through national fraud databases, so accuracy is important.
6. If you are self-employed or own more than 20% of a limited company, make sure you have the most up to date sets of your accounts available (signed by you and the accountant who prepared them), along with your most recent Tax calculation overviews and SA302s (available from HMRC). Lenders will ask to see some if not all of these documents and it will save time if you have them when you make your application.