Buying a home is a huge milestone but also a financial commitment, so it’s important to do it right. If you’re going to take out a mortgage to purchase your new property, our guide can help. Explore the best tips for getting a mortgage, including improving your credit score, building your deposit and closing old bank accounts.
1. Check your credit score
A strong credit score makes you more attractive to lenders, as it demonstrates that you’re a responsible buyer. This helps them determine if you qualify for a loan and at what rate.
You can check your credit score online with the two main credit rating agencies – Experian and Equifax. Ensure that all the information you provide is correct. Look out for the following:
• Debts that have already been paid or discharged
• Information from a former spouse that shouldn’t be there anymore
• Outdated information
• Incorrect information about closed accounts
2. Register to vote
Registering to vote can help you get a mortgage. Being on the electoral roll provides proof of address and helps verify your identity, which can speed up your application.
3. Build your deposit
As a rule of thumb, the bigger the deposit, the more competitive the mortgage deal and interest rates will be. Most lenders will require a 10% deposit to buy your new home, but some may let you buy with 5%. For example, if you want to buy a £200,000 house, you’ll need at least a £20,000 deposit. Your lender will lend you the remaining 90%, known as the loan-to-value (LTV).
If you’re struggling to save for a deposit, Skipton Building Society’s 100% mortgage could be a suitable option.
Discover our top tips on saving for a deposit and unique low-deposit schemes to help you secure your home.
4. Don’t apply for other forms of credit
In the six months prior to taking out a mortgage, try not to apply for any other form of credit like a car loan, credit card, mobile phone contract or personal loan. This will show on your credit history, and you don’t want to look like you need credit to support your application.
5. Reduce your debt-to-income ratio
Another great tip for getting a mortgage is reducing your debt-to-income ratio. This compares your debts to your overall income. It’s calculated by dividing your recurring monthly debts by your gross monthly income and is expressed as a percentage. Lenders will consider this to determine your mortgage affordability.
Your debt-to-income ratio should be 36% or lower, but some lenders will let you borrow with a maximum ratio of 43%.
6. Don’t apply while in between jobs
If you’re thinking of leaving your current job, try to postpone this until you’ve arranged your mortgage. If you change jobs and are on a probation period, this will undermine your chances of getting a mortgage, as you may struggle to find a provider.
7. Close old bank accounts
Close any bank accounts that you haven’t used in a while. This reduces fraud risk and ensures that all your details are up-to-date.
Mortgage lenders value long-term, stable credit relationships. So, if you have two credit cards (one recent and one old), we recommend keeping the older one open until you’ve completed your mortgage application. This can significantly boost your credit score.
8. Pay your bills on time
Lenders want to see that you’re good at managing money, so you must pay all your bills on time. Any missed payment will count against you on your credit file for a year and be on your records for six years. The best way to avoid missing any payments is to set up a Direct Debit, so you don’t have to worry about arranging everything each month.
Applying for a mortgage requires time and patience. Start by exploring our brand-new, energy-efficient homes across the UK. These include 2 bedroom homes to 5 bedroom homes for first-time buyers, growing families, older couples and young professionals. We also have unique homebuying offers to help you get onto the property ladder.
Call our Sales Advisers today to make your move.
Related Articles
-
- Jul 17, 2019
What to consider when moving from renting to buying
-
- Jan 03, 2020
Advice for getting onto the property ladder
