For smooth sailing, consider each of these 7 tips before embarking on your mortgage journey.
For those with no credit score – consider building your credit history by taking out a credit card and using it responsibly. Regular use and then full payment will demonstrate your good behaviour, which will be reflected in your credit score. Also make sure you are registered on the electoral register at your current address.
Those already with an established credit score: make sure that you are carefully paying off any debts and working to avoid any future problems that could mar the report.
When it comes to arranging your mortgage, we like to have your Experian or Equifax ready to read over on that first conversation, so make sure you’re prepared!
Using an accountant can be of real benefit with your tax return and day to day accounting, but they can also help when it comes to your mortgage application.
You accountant can provide your evidence of income so you don’t have to spend ages gathering it all together. Furthermore, if your accountant is properly certified, most lenders will accept this evidence as legitimate straight away.
When you’re employed you have P60s. When you’re self-employed you have SA302, self-assessment, forms. Ideally you should have at least the past 2 years forms ready (depending on how long you’ve been self-employed) to show when you start your mortgage application.
Having them ready in advance can really save time… especially seeing that HMRC could take up to 4 weeks to send them to you. You can request them from HMRC here.
This sounds simple, but it pays to really work hard on saving money each month. Lenders no longer use the old method of income multiples to work out your affordability. Your accounts will be examined with a fine toothcomb before a decision is made.
Showing that you have plenty of disposable income by reducing unnecessary outgoings will demonstrate to mortgage lenders that you can easily afford to pay a mortgage each month.
Start by switch supermarkets, reducing waste and showing that you can be sensible with your money each month. Start as early as you can – lenders will be assessing all your regular outgoings from the past months or years.
The larger the deposit the smaller the debt which can (hopefully) mean a shorter mortgage term and lower interest rate. Start saving up as soon as you can. Not only does a larger deposit mean that you can get access to better rates over a shorter period, but it will mean that there are more lenders available to you across the market.
The minimum deposit amount is 5% but we think you can do better than that!
Don’t forget that there are a lot of fees associated with getting a mortgage, admin fees and Stamp Duty Land Tax to name just two. You will need to budget for these too to protect against any costly surprises that you didn’t anticipate.
It is very important to remember that the smaller your net income on your tax return, the smaller the mortgage you can get. It might be more tax efficient to declare every last expense, however mortgage lenders criteria is heavily based on residual income after tax.
Talk to us BEFORE you submit your tax return. We can give you an estimate of the amount you can borrow based on your declared income. In some cases where clients have already submitted their tax return, there’s not much that we can do for them until the next year.
If you want to own your dream home, it’s important to get this right.
We’d hope you come to us first, but if not, we still always advise that you go through a mortgage broker.
Not only are there some lenders that will only accept your mortgage through a broker, but there are many lenders that are not on the high-street that you would never have thought to approach if you hadn’t enlisted the help of a broker.
Being self-employed could very well mean you need a specialist lender that you can’t find just wandering down your high-street – a broker will have the knowledge to find the perfect lender for your circumstances. And if they’re as good as we are, you’ll get the right mortgage for you.