Whether you’re a first-time buyer or current homeowner looking to move, getting a mortgage is a key step in buying your new home. Naturally you’ll want to secure the best mortgage deal possible and save yourself thousands in interest, but getting approved for a mortgage relies on a number of factors. We’ve gathered our expert advice on how to apply for a mortgage and boost your chances of approval.
How to apply for a mortgage
The first step is finding the best deal for you. You can choose to do this on your own or get help from a mortgage advisor
who will be able to advise on which mortgages are best for you and can strike exclusive deals with lenders.
Once you’ve chosen the mortgage lender and deal you want to apply for, it’s time to consider how you can boost your chances of approval.
How to boost your chances of mortgage approval
Detox your credit score
The first place the mortgage lender will look is at your credit score. A credit score is generated based on your credit file, which records any financial applications and contracts you’ve ever made. It also records every address you’ve lived at, whether you own or rent your home, your marital status and if you’re financially linked to another person (e.g. through marriage, or join accounts).
A positive credit score is important for a successful mortgage application, as the lender will be checking if you are a safe bet, so things like paying your credit card and contract bills on time, being registered on the electoral roll, and not being financially linked to anyone with bad credit have a positive impact. Here’s our tips on how to detox your credit score
before applying for a mortgage.
Don’t change your job
As they’re committing to lending you a large sum of money over a long period of time, the mortgage lender will want to see that you have a secure income to ensure you can make the repayments each month. Make sure you have a permanent contract when applying for a mortgage, and if you’re looking for a new job it is best to hold off until your new home is legally complete and the mortgage has gone through.
The reason lenders don’t like new jobs is because with any new role, regardless of whether the contract is permanent, you will automatically be in a probation period. This means at any point during that time, which could be from 3 months to a year, your employer can legally let you go without redundancy or extreme cause.
Clear your debts
Outstanding debts such as credit cards or personal loans will be available to view on your credit file, and will impact how much the lender believes you can afford to repay.
If you do have debts, it’s advisable to reduce these or pay them off entirely if possible before you apply for a mortgage as this will free up more ‘disposable income’, meaning money you have more available each month after essential bills are paid.
Save a bigger deposit
The recommended deposit amount is 10% of the property price, or 5% if you’re using a scheme such as Help to Buy or Home Reach. However, the larger your deposit, the less the mortgage provider needs to lend to you. This reduces the risk involved from their point of view, and therefore increases your chances of mortgage approval.
While some people choose to put buying a new home on hold until they’ve saved a larger deposit, others ask for help from family. Going to the bank of mum and dad could help you to buy your new home sooner rather than later and increase your chances of getting a better mortgage deal. Read our article on how to save a healthy deposit while renting
for more saving tips.
Get a joint mortgage
Getting a mortgage can be done on your own, but it’s always easier if you are buying with someone else who has a good credit score and secure income. This is because the mortgage lender will take into account both your incomes and credit scores when calculating how much they will offer to lend. Whereas on your own you may be able to lend £150,000, with a partner or family member you could potentially lend £300,000.
If you’re not buying with a partner, it could be worth considering asking your parents or siblings if they would be happy to enter into a mortgage with you, or act as a guarantor to increase your chances of mortgage approval.