The UK housing market remains very active, despite the more challenging conditions presented by the rising cost of living. Property prices have also continued to rise at record levels, and this can make home ownership seem more out of reach for some.
However, some people write off the idea of applying for a mortgage, even when it is still perfectly possible for them. Here are things that you can do to help you make a successful application.
Check your credit score
A credit score is designed to show how responsibly you manage your finances, so that lenders can assess your likelihood of being able to meet the loan repayments. It’s not linked to your income or job status, but it will pick up on declarations of bankruptcy or County Court Judgements.
Credit scores also reflect how good you are at making payments on time, and will pick up on defaulted or missed payments, and high levels of debt.
Spring clean your finances
Mortgage companies typically want to see three month’s transaction history, to prove that your earnings and outgoings can withstand the mortgage repayments. Therefore, do a health check on your spending, and see if there are any areas where you could cut back.
Cancel any old direct debits, and make sure you are up to date with all your loan repayments and other regular outgoings. Try and avoid taking on any extra debt until you have secured your mortgage.
Have a stable income
Lenders like to see that you have a consistent income, and many will be cautious if you have changed jobs in the last six months. If it is unavoidable, then it is best to hold off your application for a few months. Also bear in mind that lenders usually apply stricter criteria to the self-employed, requiring up to two years accounts and tax return history.
Register to vote
Whether or not you are on the electoral role is recorded on your credit file, because lenders use it to confirm your identity. If you are eligible to vote, you should by law be registered on the electoral roll. It’s your responsibility to do this, so if you are not sure of your status, check on the Electoral Commission website.
Save for the biggest deposit you can afford
The larger your deposit, the more favourably mortgage companies will tend to look at your application, because you represent less risk to them. It may mean that you will have access to a better deal as well, with lower interest rates.
In most cases, you will need at least 5% of the properties purchase price. Saving money can be a challenge at the moment with the soaring cost of living. If you are finding it impossible, then some lenders do offer 100% mortgages. However, you will need a guarantor who is willing to meet the repayments, if you are no longer able to.
You may have a family member who is willing to act as your guarantor. However, they must be able to prove they can meet the repayments, and may need to secure some of their property or savings against the loan.
For information about Tulip mortgage services, please get in touch today.
