When buying a new home, you will no doubt run an entire gauntlet of emotions. It can be exciting, nerve wracking, frustrating, worrying and often stressful. In this article we will endeavour to impart some tips and advice aimed at smoothing your path as much as we possibly can.
This month we tackle mortgages. You might be an old hand at dealing with mortgage applications, but even for the most experienced amongst us, life can throw the odd curve ball. What can you do prior to embarking on the full mortgage application process?
Credit Scores, Affordability and Income
A poor credit rating is likely to flag you as a risk with most mortgage companies and it’s always wise to take steps to improve your rating before applying for a mortgage. You can check your credit score and keep an eye on it with online facilities like Experian.
Whilst you might have a great credit score, if your “affordability” doesn’t quite add up you might find your mortgage offer is a bit shy of where you need it to be. Time to clear down some of those outgoings if you can.
Having stable employment/income is also important – a recent change of jobs might flag you as a risk, so timing of your application is crucial.
Obtain A Mortgage In Principal
It can feel like you are in a bit of a Catch 22 situation – you can’t obtain a mortgage until you’ve made an offer on a home, but how do you know you will be successful gaining the mortgage?
Obtaining a mortgage in principle (often called an Agreement In Principle or AIP) will not just set your mind at rest but will also show a seller your commitment and seriousness to the house buying process. Having an AIP will be further appealing to a seller in terms of time – mortgage applications can be a long and lengthy process and some of the work is already completed. Be aware though, that these are usually only valid for a short period (usually 6 months) before the offer runs out.
There is plenty you can do to prepare even before you find your dream home. Having your paperwork filled out ready, along with originals of your necessary ID and payslips, will help speed up the process. ID will include an original passport or driving licence, along with your P60 or payslips. Your lender will generally need to see payslips from the last three months, although this may vary so making sure that you have at least six months will be helpful. If you are self-employed, you will need to supply the details of your accountant and your Self Assessment Returns for the previous 2 years as a minimum.
The information contained in this email is very general. Everyone will have different circumstances and the information contained should not be relied upon. For specific advice, we are pleased to introduce Mortgage Advice Bureau, who work with Belvoir to provide our customers with expert mortgage advice.