Category: Mortgages

Top Five Tips to secure a Mortgage

Getting a mortgage is not easy these days. There are many things though that you can do which will increase your chances of getting one. There are five things that you can do or check to start with to make sure that you have the best possible chance of securing one.

Check your credit record

It is really wise to start off by checking your credit record. You can do this for free and it will allow you to see whether there are any mistakes or any outstanding debts that could be having an impact on your credit rating. Even if your credit rating is good, anything like this could make you seen as more of a risk. You may secure a mortgage but may not be offered such a good mortgage rate as a result of it. Therefore it is really important to take a look at it and have a think about what you can do to change things on it so that it improves. It may take time to do this, but it is worth doing as it could make a huge difference to your chances of securing a mortgage and the interest rate that you are offered.

Save a good deposit

Most people realise that you will need a deposit in order to buy a home. The lender will want to see that you are capable of saving a sum of money to help them trust that you will make the repayments on the loan. Usually you will need to save around five percent of the value of the house you want to buy in order to secure it. However, if you can get together more than that, it will enable to lender to trust you even more and they will be more likely to let you have a loan. They will also be happier if they are lending you a smaller percentage of the value of the property as this will give them more security.

Clear your debt

It is important to make sure that you do not have lots of outstanding debt when applying or a mortgage. You may not think that it is a problem if you earn enough money and have a deposit, but it will be a factor in the decision made by the lender as to whether to lend to you or not. They will want to calculate whether you have the means of making the repayments each month. For this they will look at your income after tax and your expenses to see if they feel you will have enough spare money to be able to make the payments. They will also want there to be extra left over in case the interest rates increase and so by being debt free, you will have less repayments to make and will have more means to pay back the mortgage. They will also see an unpaid debt as a sign that you may not make the repayments necessary on the mortgage either.

Pay bills/rent on time

By paying your bills and your rent on time it shows that you can be relied upon to make all payments on time. The lender will need to trust you and will want to see evidence that you will make your mortgage payments when required. If you have any outstanding bills or long term unpaid ones then make sure that you pay these off. If you are not sure whether you have outstanding bills to pay then they will be on your credit record, so if you have looked at this, then you will know.

Have a secure job

Having a secure job is really important to a lender. They will want to see that you have a good income coming in that will cover the mortgage repayments as well as your other expenses. You will need to have been working there for at least three months and not in a probation period in order to make sure that it counts as secure. You will need a permanent contract not a zero hours one. If you are self-employed it will be more difficult to borrow money but there are lenders that will provide a mortgage but it could be a lot dearer and more difficult.