Let’s look at the key areas for being mortgage ready:
What documents do I need?
Having all your documents ready to send to your Mortgage Broker will massively speed up the mortgage application process. It isn’t only your mortgage broker that will need the documents, the lender will also ask for copies.
We will review your documents before sending them to the lender to make sure all key areas are covered and potential issues identified.
Your document pack should include the following for each applicant:
- Your last 3 months bank statements for all accounts held
- Your last 3 months payslips if you are employed
- Valid photographic ID
- Proof of address
- Proof of deposit
- Your last P60 if you are employed
- Your last three years accounts or tax returns if you are self-employed
- Your latest credit report
Other documents that we tend to request are:
- Right to buy letter from the council
- Your employment contract if you have recently started a new job
- 3 months business bank statements for self-employed applications
- Proof of inheritance if this is being used for the deposit
- A copy of your AST for buy to let applications
- Portfolio details for buy to let applications
- Proof of government benefits (CSA, tax credits, etc)
Register for the electoral roll
This is often overlooked when applying for a mortgage and is a common reason for a declined application. We will need to be able to prove that you reside at the address you declare to us, being correctly registered at your current address is key.
If you are not registered you can apply online here https://www.gov.uk/register-to-vote
Being on the electoral roll will positively impact your credit score.
Clear down your credit
The amount of outstanding credit you have will impact your mortgage affordability. It is always worth clearing off as much credit as you can before you apply for a mortgage.
Review your regular monthly payments
Have you got a gym membership going out each month but 2 inches of dust on your gym shoes? On a serious note, you should check your bank statements to make sure you are only paying for things you need.
The mortgage application will consider all your monthly payments, cancelling of the unused ones will give you more disposable income.
Stay out of debt
Try not to live in your overdraft. Lenders can get a little uncomfortable if you are always overdrawn and rarely or never in credit.
Don’t apply for any credit.
This might seem obvious but applying for credit before submitting your mortgage application can weaken your chances of success. We have seen this happen many times. A client signs up to a buy now pay later credit plan or a form of store credit just before or (even worse!) during the mortgage application process and is shocked when the application is declined based on affordability.
A big sticking point for lenders is payday loans. If you have a payday loan you should make sure its cleared at least 6 months before you apply for a mortgage.
Keep on top of your finances
The lender will want to see that you can manage your day to day finances. They won't want to see bounced direct debits, large outgoings which breach your borrowing facilities or a lot of repayments for credit commitments.
You should also (unless the reason is moving money to a savings account) be able to demonstrate that you don’t spend all your income in the month. For example, your opening balance for the month should not be the same as your closing. This is really important for first time buyers, the lender will want to see that you have sufficient income after your day to day spend for your monthly mortgage payments.
You should keep on top of all your monthly credit commitments, that means not missing payments on credit cards, store cards etc.
Clear Defaults and CCJs
If you have any unsatisfied defaults or CCJ’s you should look to clear these before applying for a mortgage. This is best practice, but not essential. We work with lenders who will consider bad credit but you will pay a much higher set up fee and interest rate.
Catching up defaults and settling CCJs will give you a much better chance of securing the best possible mortgage deal.
Stick to one broker
There really isn’t any merit in trying to use multiple brokers. The more brokers you use means more searches on your credit report. Lenders don’t like to see the same application from multiple brokers as it raises their suspicions as well as multiple searches showing on your report.
You should find one broker (hopefully Hello Mortgage!) who you can form a trusting relationship with and stay with them. Unless the broker isn’t performing as you’d hoped.
Save, Save and Save some more
The larger the deposit the better the deal. The more money you can save towards your deposit will only ever be a good thing. The higher the loan to value (LTV) the more expensive the mortgage.
Check your credit report
We once had a client who was declined by a prime high street lender because she had a default for £30 from 7 years ago. She didn’t even know it was there!
It is always worth checking your credit report before you apply for a mortgage just to make sure there is nothing there that you weren't aware of.
We use soft search technology for all our mortgage applications at the enquiry stage to make sure there are no hidden nasties.
How is your partner’s credit?
Your credit report will tell you anyone who you are financially linked too. Your partner's adverse credit can impact your ability to secure a mortgage, even if they aren't being named on the new mortgage.
Be realistic - This sounds a little harsh, but it’s important.
- You need a deposit of at least 10%
- Your income should reflect your potential purchase size
- You can’t use student loans, CBILS or Furlough grants towards the deposit
- If you have a low income and a low deposit you shouldn’t be looking at high-value properties
We always recommend you speak to us before you view a property. We can quickly tell you how much you could potentially borrow based on a soft credit search. This will give you a much better chance of securing an offer via the estate agents.