For most of us, getting a mortgage represents the biggest financial commitment we’ll ever make, which means it’s important to be savvy and find the best deal possible. There many steps you can take to improve your chances of getting a mortgage application accepted.
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One of the first things you should do is get a copy of your credit report, as this will let you see what lenders see when they consider you application. If your credit rating isn’t good, give your score a boost by ensuring you’re on the electoral roll and closing down credit card accounts that you don’t use.
Do your sums
It’s crucial that you sit down and work out a budget before applying, making sure you can borrow enough to cover the purchase of the property. Use an online mortgage calculator to calculate your projected monthly mortgage repayments.
Remember the costs
It’s not just the mortgage you’ll have to repay. There are other costs that come with buying a property—such as solicitor’s fees—that can make a considerable dent in your finances. You will also need to pay stamp duty if your property is over a certain amount. The threshold is £125,000 for residential properties and £150,000 for non-residential land and properties.
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Finding the best rates for your mortgage is important, but don’t make it your only priority. Deals with the lowest rates can carry large arrangement fees, whereas deals with higher rates may have smaller or no fees. As well as doing your own research, speak to a mortgage broker. You’re under no obligation to follow their recommendation but a good one will be able to explain your options and help you find the best deal. Make sure you use a broker who offers advice from the whole market.
Remember that a lender will be assessing not just your application but you as well. If you’re thinking of switching jobs wait until you’ve secured a mortgage as lenders will want to see that you’ve spent a decent amount of time at your current job. It’s also a very good idea to reduce or clear any debts you may have. Finally, mortgages are now assessed on affordability, so a lender will analyse your income and essential outgoings to decide if you can afford repayments.
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Get your paperwork together
A lender will expect to see proof of how much you earn—so you’ll need a P60, which shows a summary of your pay and how much tax has been deducted. You get this every year from your employer. You’re also likely to need six month’s worth of bank statements, as well as payslips, utility bills and other documents. If you’re self-employed, lenders will need you to prove you can keep up repayments. They’ll ask to see at least two to three year’s worth of accounts before considering your application.
For a full list of everything you’ll need, visit moneyadviceservice.org.uk/en/articles/how-to-apply-for-a-mortgage.
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