How to get a better mortgage
Getting the best mortgage deal you possibly can will depend on a number of factors. UK lenders are more careful who they give loans to since the credit crunch in 2008 so since April 2014 there are rules they must adhere to to ensure borrowers can afford the mortgage they are taking out.
These guidelines can be summarised as follows:
Lenders want to know you can afford the mortgage you are taking on. In this respect not only how much income you earn, but also your outgoings. As part of the mortgage application process you will need to be able to demonstrate income - typically 3 months of your most recent payslips will be required and bank account statements to show that your outgoings are in order.
It is important that your bank statements don't have any evidence of financial issues such as charges for unauthorised use of your overdaft etc Evidence that you regularly slip into your overdraft may be a red flag for lenders.
To get a great high street mortgage deal you will need a good credit score. Different lenders have different approaches to credit scoring but it makes good sense to get your credit score and record before you make a mortgage application. Lenders understandably want to know what type of customer you will be and a credit score can give them an indication of your future debt repayment behaviour.
There are number of things you can do to improve your credit score which won't happen overnight but means that when you do progress a mortgage application gives you every chance of getting the best deal possible for your circumstances.
Check your credit file
You have a credit file so you need to find out what is on it. You can do this through various credit reference agencies such as Experian or Equifax. You can do this for free with most agencies.
Things to look out for on your credit report include; Electoral role - Are you on it? If not or if your partner is not on it you should think about registering - see www.gov.uk/register-to-vote - Address history - Is it accurate? Anything that causes a lender to ask questions because of incorrect data will work against you. Previous relationships - Links to old flatmates or partners where your finances were connected can have an impact - write to credit agencies to update them.
Having checked your credit file if there are previous applications for credit listed on your record these will be listed on your file for 12 months, so you may want to consider waiting for some of these records to fall off before making a mortgage application.
Any previous credit issues such as county court judgements (CCJs) will stay on record for 6 years. If this applies to you and you are at the end of the 6 years, consider waiting until this record falls off your file before making a mortgage application.
Things to cut down on or avoid completely
Lenders take into account other applications you are making for credit so try and keep this down as much as possible in the months leading up to your mortgage application. This includes things such as updating or taking out new mobile phone contracts and car or home insurance where you make take out a monthly payment plan. These are credit events so will appear on your credit file.
Stay out of your overdraft as using your overdraft on a regular basis is a red flag to lenders that you may be struggling to balance your finances.
Avoid expensive loans such as payday loans which are often percieved as loans of last resort and again are looked on dimly by Lenders as signs of financial distress.
Any unecessary credit arrangements you have get rid of them e.g. you may have old credit cards or store cards sitting in your wallet that you never use. Write to the card comapnies and cancel your card agreements with them. Revisit your credit file a couple of months after you have done this to check these records have been removed.
The action points highlighted above will need t be made in advance of any mortgage application so prepareing early could really pay off. Getting access to the best mortgage rates means you will be paying less interest and that has to be good news.
If you would like to discuss any of the points raised above or wish to discuss next steps on how you can get a mortgage or improve your existing mortgage deal call our team on 0117 313 7780 or complete our callback request form.