What They Are Looking For
Getting ready to apply for a mortgage? Whether you are hoping to buy your first home or you have been through the process before, it can really help to know what it is that lenders are looking for. Here are the things that lenders are assessing to see if they are willing to approve your application, and how doing things like working with a mortgage advisor in Essex can improve your chances!
Your income and employment stability
First up is your income. A lot of people assume that how much they earn is the only factor at play, but that isn’t true. While you are likely to be turned down for a mortgage if your income is too low to meet the repayments, the nature of your employment matters too. Lenders love borrowers who are in steady jobs, which is why those who are self-employed can sometimes find it more difficult to get a mortgage. As long as you can show evidence of your tax returns and business accounts, though, you still have a good chance.
Your credit history
Here’s the one that people dread: the credit check. A good credit score is going to stand you in good stead when it comes to getting a mortgage, but lenders aren’t just going to look at that number and make a snap decision. They are much more interested in your credit history. This covers things like your repayments on credit cards, loans and mortgages, your past applications, and even if you are on the electoral roll or not. So while your score is a good indicator, it’s not the only thing a lender is judging you on.
Affordability
Along with your income, lenders are going to want to take a look at your outgoings too. This is so they can build a complete picture of your affordability. They will look at things like credit card repayments, maintenance payments, insurance, any loans that you might have and your household bills. These include water, gas, electricity, phone and broadband. They might want to dig deeper than your fixed outgoings and take a look at your living costs. This will be things like childcare, gym memberships, holidays; you name it!
How to improve your chances
So how can you improve your chances of getting approved for a mortgage? Working with a broker is the most effective way, as they will be able to find lenders who are well-matched to you and help you complete your application properly. They’ll also be able to offer advice tailored to your situation.
You can also:
- Take quick action on your credit file – have errors amended and make sure you are on the electoral roll
- Cut down your outgoings wherever possible
- Focus on paying off any debt and avoid taking on any new debt
You’re all set
Now that you know what lenders are looking for, you can get to work on getting yourself mortgage ready! Why not get in touch with an experienced broker near you today?