What to do before you apply for a mortgage

on Tuesday, 10 February 2015. Posted in N21 Experts

 

Having a good credit score is key to securing a mortgage. Lenders will look carefully at your credit rating when assessing your application; this will allow them to establish whether or not you have a good record of keeping up to date with loans and other credit commitments. A poor credit report could make it difficult to obtain a mortgage therefore it is important to make sure that your report is as good and as accurate as it can be.

 

1. Apply for your Credit File

Firstly apply for a copy of your credit file and make sure all details are up to date and correct. You can request a copy from a credit reference agency, such as Experian, Equifax or Call Credit. We find the most popular with lenders is Experian. You have a statutory right to a copy of your report, cost £2, and to have any errors corrected. Check that your address is correct on all of your active accounts and that all credit you no longer use, such as credit and loans, have been closed.

 

2. Previous History

Having no credit history can also cause a problem for lenders. They need to see how reliable you are when it comes to repaying your debts. If you can apply for a form of credit and build up a history of making your repayments by direct debit on time each month, this could help to boost your credit rating and would show to a lender that you can borrow responsibly.

 

3. Pay off as many existing debts as you can

If you are in a position to do so, then you should try to pay off as many outstanding debts as possible. Start with the debts that have the highest interest rates! Also try paying off more of your credit card than just the minimum payment. This can improve your credit score, and could also allow you to borrow more when you need to apply for your mortgage.

 

4. Make sure you are on the Electoral Register

We find this is one of the simple mistakes clients can make if they have recently changed address. By being on the Electoral Register you will improve your chances of being accepted for credit. If you're not yet registered to vote at your current property, sign up now. Just find your local council online and apply.

 

5. Have your proof of income ready

All residential loans are now based on affordability. It is essential that you are able to prove your income. If you are employed this should be easy enough as your last 3 months payslips and latest P60 should suffice. If you are self employed request your last 2 years form SA302 (tax calculation) from HMRC. If SA302′s are not available we may be able to use your last two years accounts.

 

If you are unsure about any issues relating to obtaining a mortgage, then give Mortgages & Insurers Solutions a call or make an appointment to see us, we are based on Winchmore Hill Green. We have access to lenders that can help even if you do have credit problems or have difficulty proving income.

 

Mark Edwards

0208 920 6550


Mortgages & Insurers Solutions

Having a good credit score is key to securing a mortgage.

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