Taking your first step onto the property ladder is a big milestone. Buying a house is typically the most expensive purchase you’ll ever make. So, it’s no surprise that the process is long, and often tricky. Borrowing money always comes with a list of criteria and restrictions. And it’s no different when it comes to getting a mortgage.
Today, we’ve teamed up with the experts at Fellowship Home Loans to unlock some secrets. We’ll show you the four essential things you need to begin your mortgage application. By taking care of these aspects early, you’re much more likely to find yourself accepted. Without further ado, let’s take a look, shall we?
A good credit score
Applying for a mortgage means you’re looking to borrow a huge sum of money. The bank or lending institution needs to know you can reliably pay that money back. Their first step is looking into your existing credit score. If they can see that you have always paid your debts on time, you’re more likely to be accepted. (And offered a lower interest rate). If, however, you have a history of missed payments and black marks, the bank is less inclined to offer you the cash.
A stable career and proof of income
Mortgage lenders prefer to grant mortgages to those with a stable career. Why? Because, it means that your income is likely to remain strong over the coming years. A stable employment record proves that you’re a reliable customer who won’t suddenly find themselves in financial trouble. To prove this, you’ll need to show proof of income, so your mortgage lender can sign off. Things get a little trickier if you’re self-employed. You’ll need three years of accounts to show that you have a stable income.
A deposit (the bigger the better)
The cash deposit you have saved up is always a crucial factor. It typically determines how much the broker will lend you, and it sometimes affects the interest rates. Most importantly, a larger cash deposit means you can borrow within your means, and a bank will always prefer that. Ideally, you’ll look to save roughly 10-20% of the property’s value before applying for a mortgage. It’s a huge figure, but it pays to hold out. Lenders tend to reserve their very best mortgages and rates for those with a chunky deposit. You’ll end up with lower monthly payments, and a much bigger chance of your banker saying yes.
The last thing a bank wants to do is risk lending to someone already in huge debt. They know that it will significantly increase the pressure on repayments, and you’re a risky customer. If you walk into an application with maxed-out credit cards, it’s going to be a short meeting! Take the time to clear your debts, and show lenders you can live within your means. It might mean holding out for longer, but it’s well worth it.
That’s all for now, folks. Follow this advice, and you’ll secure the perfect mortgage, and the house of your dreams!
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