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HOW TO GET A MORTGAGE
Mortgages have been back in the headlines in the wake of the Bank of England’s decision to increase interest rates by a quarter of one percent to 0.75%.
It’s not a huge amount and it’s worth remembering that the conditions are still comparatively favourable for those hoping to get a foot on the property ladder in the UK. Rates have been so much higher in the past and, in some countries, remain so.
But, as some commentators have already pointed out, the risk buyers now face in the UK is that the low interest rates may not be sustained; indeed The Bank of England has already hinted another rise is likely in the near future so – particularly if you’re a first-time buyer – now might be a good time to make that first investment.
Of course, there are still obstacles to overcome – not least the considerable deposit many lenders will require before your mortgage application can be approved.
But you can also enhance your chances of success by making sure you’re ready for your appointment and that your finances appear to be in good shape.
Here are a few things to consider before you make that call:
Your credit rating: Obviously, you won’t be doing yourself any favours if a check shows you already have a record of being late with credit payments but you can also help your cause by reducing your outgoings. Do you have a subscription for a gym you hardly use, for example? How about other luxuries you could do without such as a book club or a mail-order wine company? A little bit of pruning could make a difference…
The Regulars: When it comes to the bills we all have to pay – water, gas, electricity or rent for example – it may help your cause if you can demonstrate you pay by direct debit. It underlines your reliability, which will be important to a lender.
Life’s Little Luxuries: We all indulge a little of course and a takeaway and a bottle of wine on a Friday evening isn’t necessarily going to prompt a mortgage broker to throw up their hands in horror. However, if your finances are a little stretched but still show outgoings such as a new set of golf clubs, a couple of holidays in the Algarve and a top-of-the-range flat-screen TV, then you may find it harder to persuade a lender you’re a viable prospect. Try to rein in any spontaneous spending, particularly if it’s pushing you into the red or close to it. You are going to have to demonstrate you have disposable income you can invest in a mortgage so the more of a margin you have every month, the better.
Timing: Don’t wait until you’ve found the house of your dreams before visiting a mortgage advisor. It’s better to have already done the groundwork and to have worked out what you can afford first. That way, you may be less likely to stretch your finances or make unrealistic decisions simply because you’ve already viewed a home and set your heart on it.
The Paperwork: It’s not everyone’s favourite thing but, when it comes to getting a mortgage, it’s unavoidable. You will need your passport; details of your solicitor and your doctor; three months of payslips, your cheque book, bank statements and credit card payments and details of your outgoings every month; proof of residency and your home addresses for the last three years; your last P60 and details of your employer or, if you’re self-employed, your last three SA302s; proof you have the required deposit; and details or any personal insurance.
Friends and family: If you know anyone else who has recently applied for a mortgage, they could be a valuable source of information. Ask questions and, if you can, find some time for some internet research. This won’t be the only blog you will find on preparing for a mortgage application; there will be others out there, some from the financial institutions offering more detail.
As ever, if you’d like any more advice please feel free to drop us a line or give us a call; remember we’re online estate agents rather than financial advisors but we’d be delighted to assist if we can.
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