How to boost your chances of getting a mortgage
Having a big enough deposit certainly helps with getting a mortgage, but it isn’t the only factor that determines how much you can borrow, or indeed, whether you can borrow at all. Lenders these days are increasingly concerned with whether you can make repayments and will therefore want to assess your suitability for a mortgage by looking at your past financial behaviour. With this information they will give you a ‘credit score’. This score will very likely affect whether you will be offered a mortgage so it’s a good idea to be aware of this in advance so you can implement a few changes that may just help you appear more attractive to a prospective lender. First make sure that you always meet at least the minimum payment on any credit cards or loans you may have. Consider setting up a direct debit so you avoid late payments or missing a month and remember that repaying more than you need to looks even better, so where you can make manual repayments also. Ensure that you are on the electoral roll. This will make any prospective lender’s life much easier as they can instantly see you are registered to live at your current address saving them both time and hassle.
It’s worth checking your credit file yourself. You can get copies of your files from all three credit reference agencies – Experian, Equifax and TransUnion. Check through your file for any errors and if you do find any, add a notice of correction to the file explaining why you are querying it. If the credit reference agency won’t help, you are able to complain to the Financial Ombudsman Service. You can also write to credit agencies asking to be delinked from someone you had joint finances from in the past, this prevents their credit history affecting yours. Importantly, ensure that your address is correct on all active accounts like mobile phone contracts and any subscriptions you may have. Even if they are not in use, they can cause lenders to be concerned if the details don’t match up. If you have a credit card don’t withdraw cash on it - this will be noted on your file and viewed badly as it will appear that you are unable to live within your budget. Also avoid applying for anything on credit in the months before your mortgage application.
Even car insurance and mobile phone contracts get added to your file and can look like you’re struggling to manage financially on what you currently have. Similarly, some lenders won’t even consider offering you a mortgage if they find that you are constantly using your overdraft facility. To a lender, this is a sure sign that you are struggling financially so avoid doing this at all costs and certainly within the three or so months before applying for a mortgage. The same applies to payday loans – they are not viewed positively and can severely affect your chances of getting a mortgage. On the flip side of all this, if you can add any extra amount to your deposit, it could make all the difference. Even being able to add 0.1% more than the minimum deposit can increase your chances of being accepted by a lender or at least reduce the amount of paperwork the lender may request to see.