What To Do When Looking For A Mortgage?

The truth is obtaining a mortgage in 2023 has become even more difficult and harder to achieve especially for First-Time-Buyers looking to get their first home and a foot on to the housing ladder. A mortgage and buying a home is one on the biggest financial investments you could ever make, you will need to make sure you get the best mortgage and mortgage rates that suits your lifestyle, living standards and needs. A mortgage is a legitimate arrangement between you, your bank & any other financial institutions that you borrow money from to buy a house or property. Below we have listed some great ideas on what to do when looking for a mortgage and how you can make you chances more successful.

A mortgage is a great solution for anyone that has low cash flow and wants to borrow the money to buy a house, building, land or any other entity. A mortgage is a loan that you borrow from the bank or a financial institution the loan is always paid back with interest. When borrowing the money for your mortgage you agree to pay back the money to the lender over a period of time usually up to 25 years, due to the increase in house prices mortgage lenders are lending up to 40 years to help First-Time Buyers to get on to the property ladder..

If you fail to keep up with your payment arrangements and your mortgage is in arrears the lender may proceed court action against you, if the owing balance on the mortgage is not cleared and brought up to date. This means, as a last resort your home could be repossessed by the lender which is a legal process to take back possession of your home or property.

Your mortgage lenders will make solid checks on your financial background and status to see if you are deemed fit to borrow the money you are asking for. You will need to consent to these checks to be completed before your mortgage application will be approved. Below we have outlined standard checks that your lenders will need make before your mortgage can be approved.

Credit File Checks

One of the first financial checks that your mortgage lenders will make is checking up on your credit files. This will notify your lenders of your credit history and all the money you have borrowed in the past. This can be a good thing and a bad thing. The bad thing is if you have multiple loans your lenders will be able to see this on your credit file and this may impact your mortgage decision. If possible its best to clear any outstanding debts that you have showing on your credit report and file. The good thing is if you have no outstanding depts and you have paid all of your payments on time, this means it will be easier and more likely that you will be accepted for a mortgage.

Before going to your lender for your mortgage contact your credit file agencies, the main ones Experian, Equifax and ClearScore do your homework on what financial information these credit agencies have on you before making a mortgage application to the lenders.

Payment History

Your lenders will want to check your credit report to see how affective you are at making payments and how well you have made these payments in the past. If you have loans, credit cards, finance or any other borrowing your lenders will be able to see the payment history made to each institution. All they want to check is that you have been keeping to your financial arrangements by making payments on time. Late payments or debts owed will show on your credit report history.

Assets On Finance

Your Lenders will also check for any outstanding finances that you have on your credit report. For example vehicles, machinery or any items that you may have purchased and show up on your credit report. The price of the items borrowed that show on your credit report may have an impact on the mortgage lenders decision on how much they will lend you for the mortgage. If you have outstanding finances its best try to get these cleared if you can before applying for a mortgage.

• Get a copy of your credit reports – Shows what credit agencies can see
• Work out the figures involved and whether you can manage the monthly payments
• You will need to stay within the same job for some time up to 6 months before some mortgage lenders will accept your application
• Clear any outstanding debts or borrowing that you have showing on your credit report and file
• If in full time employment your lenders will want see proof of your income and what money you are earning and have coming in. They will ask to see payslips as proof of income. Most lenders will want to see at least 3 months of payslips.
• If you self employed and looking for a mortgage it can be more of an uphill battle especially when just starting out. Most banks and lenders will want to see at least 3 years of business accounts submitted to HMRC before a mortgage is accepted. You will also need a bigger deposit because self employed workers are seen more of a risk to lenders. Overall the Mortgage lenders need to see that you will be able to keep up with payments in the future.

There a several types of mortgages to choose from that meet individuals needs, there are mortgages to suit First-Time Buyers, Home Movers and Private Landlords. Below you will see a list of the mortgages available.

• Home mover mortgages
• First-Time Buyer mortgages
• Buy-To-Let mortgages
• Remortgages

Mortgage lenders work out the actual cost of your deposit based on how much the property is worth, your income and how much of a risk you are as a borrower. If you are deemed more risky for lenders to lend you the money for your mortgage, they may request that you pay a much higher deposit than usually expected. The higher the deposit the more easier it will be to get a mortgage, a better deal and make lenders more comfortable with approving your mortgage.

The higher the mortgage deposit the better. Many lenders will accept 5% deposits on the property price, however we recommended that you approach your lenders with at least 20% of the property purchase price as your deposit. Bank and lenders will take you more seriously and will help to secure a mortgage for you that offers better interest rates. Mortgages deal look more attractive when you increase your mortgage deposit to 20% of the property price and above.