Saving For a Home? How To Increase The Chances Of Being Accepted For a Mortgage

Written by Karen Bryan

house for saleApplying for a mortgage may require a degree of planning and ensuring certain aspects of your financial and related situations are in order. Perhaps some building or rebuilding of creditworthiness before hitting the High Street to see what’s available, may be required.

The following will help you assess your chances of success and, if necessary, show some steps required to improve them.

Your credit history

You’ll likely be aware of the need for a good credit history and how it’s recorded. There are three main credit agencies – Equifax, Experian and Callcredit – who build a record of your financial activities such as:

  • Bank account use
  • Credit card use
  • Bills and other (personal loans, mobile phone contracts) payment history
  • Mortgages

This information will be used by the mortgage lender to assess whether to offer you a loan and, if so, how much for.

It’s worth checking your credit file with one of the main three credit reference agencies. If there is any incorrect information recorded you should definitely seek to have it removed or amended.

Electoral roll

Ensure you’re registered to vote where you live; it’ll prove almost impossible to get accepted for a mortgage if you’re not.

Remove financial links with others

If you were once financially linked with someone, such as an ex-spouse or partner, then ensure you are ‘disassociated’ by writing to the credit reference agency. If you don’t, then it’s possible any financial misdemeanour of theirs (such as missed payments) could impact on your credit rating.

Credit rebuilding

If you need to do this then it will take some time, so don’t apply for a mortgage just yet.

One way to repair credit is through a credit card specifically for the purpose or a loan – you can also rebuild credit through Avant Credit. As you make payments, they’re recorded with the credit reference agencies, therefore contributing to a positive credit history.

Avoiding unusual properties

You may fancy that converted lighthouse but mortgage lenders are wary of lending against unusual, and therefore potentially harder to resell, properties. They’re keen to check if they’d be able to sell the property quickly, should you default on the mortgage.

Manage existing debts

This is something of a balancing act, as lenders will be wary if you have too much or too little credit available, such as through credit card balances. Too much and they’re worried you might suddenly rack up large debts, too little and they’re worried you’ll be near to your maximum with little margin for error.

As a general rule of thumb, try and stay below 50% of your combined credit limits.

Inactive accounts

Some older, inactive accounts should be closed. Perhaps an older credit card could be kept as it may be giving you a useful boost on your credit rating.

Other steps

The Rental Exchange scheme, introduced in March 2016, is a way of recording rental payments on your credit file to help boost your credit rating.

It’s advisable not to apply for credit for at least three months before applying for a mortgage (hence the need to plan ahead as in the case of credit rebuilding above), and also try and cut back on general spending. Your outgoings will be assessed by a mortgage lender and they may ask to see recent bank statements.

Finally, ensure all your application documents are in order and up to date; such as payslips, your P60 and related paperwork.