Trying to get approved for a mortgage can feel like an impossible task. Sadly, since the credit crunch and recession, many people have reluctantly accepted that they are facing longer stints in rented accommodation.
When you decide it’s time to buy your first home, the real estate fees, legal costs and the amount required for a deposit can come as a shock. But if you’re struggling to make sense of it all and find that elusive mortgage, we have some advice that might help.
Save a Deposit
This is key. In the UK, a deposit must be at least 5% of the cost of the home. But remember, the larger the deposit you save, the less interest you’ll pay and the greater chance you’ll have of securing a mortgage. So if you’ve managed to save a larger sum or are a first time buyer and have parents that are happy to lend a helping hand, this will work in your favour.
Alternatively, there’s the Help to Buy government scheme that can help you get onto the property ladder. There are two types: the Mortgage Guarantee and the Equity Loan.
Improve your Credit Score
To be approved for a mortgage, you need to be able to prove to a lender that you’re financially stable and able to make monthly repayments. Your credit score will tell them all they need to know about your credit history, including any overdrafts and loans, previous or present mortgages, credit cards and even utility payments. Essentially, this information is used to assess whether you are a viable candidate for a mortgage or a risk.
Make sure you check your credit score before you apply for a mortgage. By doing so you can improve a bad score before you have the chance of being declined. There are many online agencies that offer free credit checks, including Equifax and Experian.
Register to Vote
This may never have crossed your mind but it can be an important factor when applying for a mortgage. Even if you have a perfect credit score, without being registered on the electoral role, it’s nearly impossible to be accepted for a mortgage.
A lender will use this information to verify your identity. Check with your local council to see if you’re on the electoral register. If you’re not, register here.