Mortgage applications: What do lenders look for?
Sponsored feature | Rachel Zschieschang, Mortgage Advice Bureau
When we think about mortgage applications, more often than not they are followed by headaches and stress.
For someone going through the process of getting a mortgage for the first time, all the paperwork involved might seem a little overwhelming. And, although it can be, making sure all your paperwork is correct and handed in on time, will help make getting a mortgage that much easier.
We have put together an overview of the kind of things lenders look for to help you get your mortgage application right first time.
What paperwork do I need?
Lenders want to be sure that when they lend you money, they do so with the certainty that you will be able to pay it back. That’s why they will ask to see recent bank statements, employment history, and check your credit score, to assess whether you’re a low-risk borrower - this is called an ‘affordability assessment’.
During the assessment, lenders will weigh up your incomings against your outgoings to make sure you can afford the monthly mortgage repayments, on top of any other current expenses. This is also where they will check your credit history - if you do have any existing debts or nasty spending habits, such as gambling, this could complicate your mortgage application so it’s best to get all debt cleared off beforehand.
If I do have bad credit, how can I improve my mortgage application?
If you are one of those individuals who maybe spends a little too much on gambling, or has existing debts hanging over your head, it’s not the end of the world! Here are some simple tips on how to get your credit back in shape:
- Pay off any existing debt: by paying off debts you’re showing lenders that you can handle your money responsibly.
- Curb your spending habits: spending the odd £10 every now and again on gambling or new clothes isn’t a major cause for concern. But if you do notice your spending is getting out of hand and leaving you short of money by the end of the month, now might be the time to tighten your belt. Not only will this show lenders that you handle your money wisely, but it will also help you put money away for a rainy day.
- Start a savings account: by opening a savings account, and paying into it regularly, it will show lenders that you can be responsible with the money you earn, as well as allowing you to save money for a deposit.
At the end of the day, lenders just want to be certain that you’ll be able to keep up with monthly repayments. It isn’t rocket-science, and it doesn’t need to be stressful - as long as you provide the correct documents and can show you spend your money wisely, getting a mortgage really isn’t as scary as it seems to be.
But if you do still have questions or are unsure of exactly how to kick-start your mortgage application, get in touch with our team today so we can help you start your home buying journey. Call us on 07375 886347 or you can visit our website at mortgageadvicebureau.com/cambridge.
Because we play by the book we want to tell you that your home may be repossessed if you do not keep up with repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances, but a typical fee is up to 1 per cent of the amount borrowed.