If you haven't remortgaged recently, you may find that you have to jump through a few extra hoops to obtain a new mortgage. Likewise, if you're trying to get a mortgage for the first time, it's useful to know what can improve your chances of getting that all-important loan.
So we've compiled a list of ways you can turn yourself into a more appealing borrower…
When making a mortgage application, the length of time you have been with your current employer can help determine if you're eligible. As a general rule of thumb, at least 12 months with the same employer is sufficient, but this will vary depending upon an individual lender's conditions.
A good idea, then, is to stall any thoughts of that job move until after your new mortgage has been sorted. Incidentally, if you're thinking of going self-employed in the near future, consider a mortgage that won't need changing in the near term, as it will be difficult to remortgage during the first few years you are in business.
It's best to get into the habit of repaying credit cards, store cards, catalogue accounts and overdrafts anyway – it'll save you money – but having less of this kind of debt will also increase your chances of getting a mortgage.
Lenders take into account the amount of outstanding debt you have, and the monthly payments you make, when assessing whether you can afford the mortgage. Worryingly, some lenders may even assess affordability using the potential amount of debt you could have, assuming that you have maximum balances on all your cards and overdrafts, instead of the balances you do have.
If you don't use a certain credit card or overdraft, why not close it? Also, try to put all expensive debts onto the cheapest card you have (applying for a new 0% balance transfer credit card will impact your credit score – so leave doing this until the new mortgage has completed) and close the rest instead of repaying several and having lots of opportunities to spend.
It's important to check your credit report before applying for a mortgage as there may be items that have been repaid but appear outstanding, or even fraudulent applications made in your name. Getting this all dealt with prior to applying for a mortgage, before any money is lost, is a simple thing you can do to improve your chances of getting a mortgage.
If you've got some money collecting little more than dust in a savings account, consider making an overpayment on your current mortgage instead.
If you have a particularly high loan-to-value (LTV) - the amount of mortgage in relation to the value of your home - the higher the mortgage rate is likely to be, and it could also make remortgaging more difficult. So, by overpaying, you're reducing the amount of mortgage you have and lowering the level of risk that a lender has to take on, and both of these could work in your favour when a lender is assessing the application.
As an added bonus, by overpaying and reducing the LTV you'll be able to repay the mortgage quicker and will have access to cheaper deals, thereby helping you repay your mortgage more efficiently and cost-effectively.
The explosion of property prices has had a severe impact on how big mortgages are in relation to wages, and securing that big mortgage could be even harder.
But while you may be able to afford the monthly repayments, another side-effect of high property prices is that it's really tough saving a deposit, even just 5 or 10%. So enlisting the help of financially-supportive parents can really make the difference, and there are several ways they can help:
With any sort of arrangement where somebody takes a financial interest in your mortgage, we would strongly recommend seeking financial and legal advice.
There are two phases to the Help to Buy scheme. The first is the equity loan phase, whereby you put down a 5% deposit and will get a 20% Government equity loan to help fund the rest, meaning you only need to get a 75% mortgage (note: this is only available to new builds). The second phase, mortgage guarantee, is where the Government acts as guarantor for 20% of the loan amount with you again stumping up a 5% deposit, except this time you need to find a mortgage at 95% LTV.
Either one could be a great way to help you secure a mortgage, either as a first-time buyer or a home mover, as you only need to find a small deposit to be offered great loan deals. Just make sure you can afford the monthly repayments on such a high loan amount.
When going through the application process, your property's value will be assessed. If you need to borrow at a high LTV this will almost definitely mean a valuer physically coming round to inspect the property.
It's the same as if you were trying to sell your house – it needs to look its best to command the highest price. So make sure the outside of your property is well maintained and that the interior is also. For the purposes of a basic mortgage valuation, they are looking at saleability of the property. The higher the value of the property, the more likely you are to secure a lower mortgage rate.
As well as searching the market for the best remortgage deals, don't forget to check what your current lender could offer. There will often be exclusive deals for you to remortgage to, sometimes with lower fees. The chances of acceptance also tend to be higher – after all, you already have a mortgage with them!
As opposed to going directly to a lender, making use of a good whole of market mortgage broker can improve your chances of getting a mortgage.
A broker will search the market and will have knowledge of lending conditions particular to each lender, which, as well as your personal financial situation, they will take account of before making any recommendations to you.
Beware though: check how much you have to pay for this advice, as fees can vary widely. Make sure you're comfortable with how much the broker's fee is before proceeding.
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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
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