How to put yourself in the best position for a mortgage.

Getting a mortgage is one of the more challenging things to do in 2022, especially in a post-pandemic, high inflation economy with a cost of living crisis upon us. Fortunately, there are things you can do to increase the likelihood of getting a good one.

Questions that will arise when you think about getting your first mortgage are:

• Am I able to get a mortgage?
• How much can I borrow?
• What do lenders look for?
• Do I have to go through my bank?

Today, we’re going to answer these and take you through some of the things you need to consider when applying for a mortgage.

What will my mortgage lender look for?

The most important thing that a lender will look at is, your ability to pay back the money. This is known as affordability.

Mortgage lenders want to know that if they’re going to lend you money there is a high likelihood that they’re going to see that money back, with interest.

The way lenders do this is by looking at your payment history. How often do you make big purchases? How many direct debits have you got? Have you any outstanding debts?

There are four main things your lender will look at:

• Loans
• Credit Cards
• Direct debits
• Monthly recurring costs of living

The cleaner your financial history is the more likely you are to secure a good deal.

Can I get a mortgage with a bad credit score?

Having a bad credit score won’t automatically rule you out of getting a mortgage. It could however limit who is willing to lend you the money and how much they are willing to lend.

A good way to check your credit score for FREE is via Experian. Experian has an app you can download to your smartphone and will calculate your credit score for you.

What are the causes of a bad credit score and how to fix them?

The most common cause of a poor credit score is unpaid debts.

If you have payments which haven’t been paid on time or haven’t been paid at all, these can all contribute to a poor score.

One of the most common issues of debt is overdrafts. Even though you may have the money to pay off your overdraft, it is important you do so quickly.

Speed and timeliness when paying bills make a difference!

Another way to improve your credit score is to put your vehicle insurance, rent or mobile plan (if you have any) on a monthly payment plan.

The more consistent, successful payments that are made from your account, the more the bank recognises your ability to pay the money back.

What is a joint mortgage?

As mortgage rates and house prices increase, it is becoming the ‘new norm’ to split the cost of purchasing a property between different people.

A joint mortgage is the same as a normal mortgage – you pay a deposit and then you pay off your mortgage in monthly instalments.

The only differences are that the cost and ownership are split between two or more people.

A benefit to getting a joint mortgage is that together you are likely able to acquire a larger mortgage.

The biggest hurdle is that both your financial backgrounds are taken into consideration. If one is rockier than the other, this could affect your affordability.

Can I pay more than my partner if we get a joint mortgage?

Yes, in some cases if you earn more than the other contributor, you can bear more of the financial weight when applying for the mortgage.

For more information on buying with a partner read our blog on the pros and cons of buying with a partner.

What happens if I get rejected?

If you get rejected for a mortgage it is important to not jump straight into re-applying.

Your mortgage broker will inform you of the reasons why you have been rejected. It is important that you amend these issues before reapplying.

It is important to note, however, that just because you have been rejected by a lender doesn’t mean that your chances of getting a mortgage are gone as another lender may be willing to lend to you in your current situation.

Therefore, we recommend speaking to a mortgage broker as a broker is able to compare multiple rates from multiple lenders at the same time to find you’re the right fit.

Shall I get multiple mortgage offers?

When you get a mortgage accepted you will be offered an AIP (agreement in principle).

An AIP is a document that confirms the amount your lender is willing to lend you and confirmation to your estate agents that you have a mortgage in place for your purchase.

Can I get more than one Agreement in Principle or AIP?

In theory yes, however, it’s not recommended as lenders needs to run a credit checks to provide an AIP.

Consequently, the more credit checks you have done the more suspicious or unusual it may look to other lenders.

It is worth seeking out your preferred lender prior to receiving an Agreement in principle.

Where do I find a mortgage broker?

Your estate agents should have access to a wide range of brokers or perhaps, may have one ‘in-house’.

If your agent does not have a recommended broker, your bank and Google can both help. If you do go down the google route it’s worth talking to a few brokers as they can access different deals.

Exchange Train are not able to offer financial advice. Please refer to a qualified finanical adviser for support with your specific situation.