In the current climate it can be hard to get a mortgage or to find the deal you want, but there are a few things you can do to make the process easier.
Mortgage lenders definitely have the upper hand in today’s difficult market, and that means they’re being choosy about who they give a mortgage and who gets their best deals. You can’t guarantee you’ll be approved for a mortgage, but if you follow these tips you should be able to increase your chances of getting the mortgage you want.
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
Check your credit file
Credit scores matter because lenders look at them to help them decide whether to offer you a mortgage, and how much you can borrow. There are three main credit scoring agencies in the UK – Experian, Equifax and TransUnion (formerly Callcredit). If you don’t want to pay to access your credit score, ClearScore* offers a free credit checking service that accesses Equifax data. They also offer free identity protection that scans for stolen passwords, security problems and tips on how to spot scams and fraud.
Alternatively, there’s MoneySuperMarket’s Credit Monitor tool*, which enables you to check your credit score and report free of charge using data from TransUnion and also offers free personalised tips to help it grow. Experian similarly has a free service that enables you to sign up and check your credit score with them and Totally Money offers a similar service using TransUnion data.
If your credit file has any mistakes on it – perhaps it links you with someone you were married to or lived with but are no longer ‘financially connected to’ – you should get it corrected.
Save the biggest deposit you can
If you’re buying for the first time, a 10% deposit is the absolute minimum you should aim to put down, but you won’t get access to many mortgage offers and you’ll find banks are very picky about who they lend to. Many of the best deals are available to those with a 25% deposit, but some are reserved for borrowers with a 40% or even 50% deposit, or the equivalent amount of equity if remortgaging.
As a rough rule of thumb, for every extra 10% you borrow you can expect to pay around an extra 1% on your mortgage rate.
Reduce your debts
Most lenders now work on the basis of affordability rather than income multiples. This means they take outgoings, such as credit card and loan payments into account. The more of your income that’s going on debt repayments the less you’ll be able to borrow.
Remember to check your bank statements before you apply for a mortgage too. Lenders are likely to want to see three months of bank statements. That doesn’t mean you have to be in the black but you mustn’t have any bounced cheques or returned direct debits, or this could affect your chances of your mortgage application being accepted.
Remember to close any credit card accounts that you’re no longer using. These days banks and building societies look at the overall amount you could potentially borrow when working out whether or not to lend. If you’ve done a couple of balance transfers or have applied for several cards (especially if you have a large credit limit), shut down any accounts for cards you don’t use. It’s not enough just to cut them up, you need to contact the credit card provider as well. Find out more in our guide Seven steps to improve your credit score.
Always make debt repayments on time
Ideally any credit card debts should be paid off (preferably in full) every month. Mortgage lenders want to see that you can borrow money and pay it back on time. Experts say that having two credit cards can boost your credit score by more than having just one.
Don’t think defaults for small amounts aren’t important. If you’ve got a ‘default’ on a credit account, where you’ve failed to keep to the terms of the deal (which often happens after you’ve missed three payments) it doesn’t matter how small or large the sum involved is, lenders will be concerned.
If you have missed any payments what can make a difference is how recent the default is. A default stays on your credit file for six years and one that was registered in the last year will cause far more of a problem than one registered five years ago.
Use a mortgage broker
With so many mortgages to choose from, finding the right deal to suit your needs by yourself can be challenging, so it’s usually well worth seeking advice from a mortgage broker if you need help.
It’s not just that they can find you a competitive rate but they will know how lenders assess applications and which lenders are targeting which section of the market (first time buyers, remortgages and so on). Some mortgage lenders only offer their best deals direct to customers and not via brokers, and brokers aren’t obliged to tell you about these. Having said that, a good broker should look at all the available deals on your behalf, but check before you sign up with one. Find out more in our article Should I get advice on my mortgage?
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
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