Do’s and Don’ts when Applying for Your First MortgagePosted by: Miro | Post date: 19.11.21
Purchasing your first home is an exciting time in your life but one of the first things you might start thinking about is a mortgage and how to ensure the successful application process from start to end.
Many mortgage advisors will be willing to speak to you and offer you their banking services however, before deciding to speak to them it’s vital that you learn more about the process so that you can get a better understanding of how the mortgage process works.
Being prepared is one of the most important steps during the mortgage process and hence it is vital to understand the do’s and don’ts you should follow prior to and during the mortgage application.
Approval and Qualification
Pre-mortgage qualification is an essential step as it determines how much you can afford and so it helps you refine your house search as well. Nowadays, since banking is becoming more digital, you can often fill out your application online without the need to go to the branch first. This process ensures that once you find a home that you like, you can make a stronger application with a higher chance of success because your lender has already approved that you are able to afford a home in a certain price range.
It’s not really recommended to start looking around for a home until you are pre-approved. The reason for that is, you may be looking at houses that are outside of your range which could lead to disappointment or on the contrary, you might be able to afford the better property without even realizing it. Having a pre-approved application puts you in the right mindset.
Try to reduce your debts as much as possible before applying for a mortgage. The last thing a lender wants to see is that you have a large amount of outstanding debt or loans elsewhere. Having low or no debts will also serve as a demonstration that you are responsible with your finances and could lead to you being able to borrow more and get the best deals.
Have a large amount of credit debt or loans outstanding. This will do the opposite of what we discussed in the Do section and lead to a whole lot of issues. You won’t be able to borrow as much or might even get straight up rejected as it shows you have no financial responsibility and wouldn’t be trustworthy with such an investment.
A good credit score rating doesn’t happen overnight. Therefore, being vigilant about it long-term pays off when applying for a mortgage. Having a low credit score can really affect not only the size of the mortgage but even eligibility to apply. There are a couple things you can do to increase your credit score such as making sure you’re on the electoral roll and closing down credit accounts you no longer use.
Late bills payments, rent or other purchases can be an easy way to damage your credit score which then takes a long time to repair. If you are not confident about the payment deadlines, set up direct debits where possible to ensure all your bills are paid on time and don’t affect the quality of your credit score.
Ensure the stable income
Long-term stable income can have a significantly positive impact on your application. Stability is one of the key factors in the mortgage process because if you can’t show that you have a stable income, you’re less likely to be approved.
It may take longer to process your online mortgage application and you may even be rejected if your income isn’t stable enough.
It’s not advised that you change jobs just before applying for a mortgage or in the middle of the application. This raises red flags and can cause some major setbacks and slowdowns during the whole mortgage process.
The only exception could be a positive employment change, such as being promoted to a higher position or starting up a new business or stream of income.
Talk to Experts
Working with a professional can not only significantly improve the quality of your application but you can also gain valuable knowledge during the process. It will also ensure that you don’t miss anything in the documents provided to you during the mortgage process and on closing day.
Many people make the mistake of trying to save money by refusing to hire a professional to assist with the mortgage process which can end up being a poor choice because it may result in missing crucial documents.
We hope you found these quick tips useful on how you can better prepare for the mortgage process when looking to purchase your new home.
The key takeaways are that you should always have records for anything related to your finances including career changes, pay raises and changes in your household. Don’t be afraid to contact people for assistance because the mortgage process can be overwhelming without a trained professional helping you.
If you are still looking for your perfect home, don’t hesitate to get in touch with our expert estate agents at Lawton & Dawe who will be able to advise you on the best steps possible when purchasing your first home.