Friday, 20 May 2016

Why it’s important to think ahead when applying for a mortgage

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Applying for a mortgage can be a daunting prospect, but with the help of a professional mortgage adviser it doesn’t need to be.

Why is it more difficult than it used to be?

In the past, some people were allowed to take out a mortgage they could not afford. This led to some of them falling behind with their payments or losing their home. A mortgage lender must therefore check that you can afford your repayments now and in the future. To do this they will need information about your income and outgoings. So before you launch into the application process there are a number of small things you can do that could greatly increase your chances of getting your dream home.

Your credit rating is important

Your credit score enables lenders to see that you have the financial means and discipline that will be required to pay back your mortgage. Key things lenders will check include your history of repayments, so if you have any missed payments on credit cards, catalogues or any other existing debts within the last three months, this may hinder your chances. Make sure you have applied for your credit report and disclose anything that may affect a mortgage application to your mortgage adviser, with their industry knowledge they will be able to look at the most appropriate lenders for your situation.

Are you linked financially to someone else?

If you’ve got financial links to someone else, for example, a joint bank account from a previous relationship, you will need to ensure that that link is removed as soon as possible. If that person makes a late payment or has any other issue that affects their credit, it will reflect on your own report and hinder your chances of getting the best deal. As before, if you do think this may be a possibility let your mortgage adviser know as soon as possible, forewarned is forearmed.

Take a good look at how you are managing your credit

When applying for a mortgage, your last three months’ account statements will come under scrutiny so it’s a good idea to prepare ahead of time. When we talk about credit, we don’t just mean your credit card, it is also your debit balances on your bank accounts and overdraft limits. You should avoid things such as applying for credit in the run-up to a mortgage application as this would not look favourable.

The important thing to remember is that every lender is different in what they view as the ‘perfect candidate’ to lend to. Just because you don’t fit one lenders’ criteria, it doesn’t mean you won’t fit another’s. A mortgage adviser will be able to guide you through the process and advise you on all your available options, helping you to get a product that suits your personal needs and circumstances.

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