As a first time buyer, finding the best lender might feel like looking for a needle in a haystack. This is why speaking to a qualified and experienced mortgage adviser could save you a great deal of time and stress.
How much you can borrow for a mortgage will depend upon a number of variables, such as how much you earn, or your credit history. Each mortgage lender has a different approach to mortgage underwriting, which means there is no way to guarantee that you will be offered mortgage. However there are some things you can do to be as ‘mortgage-ready’ as possible.
1. Get an Agreement in Principle
Getting an Agreement in Principle (sometimes referred to as a Decision in Principle) will involve the lender performing a credit check and address check on you. If you pass their initial lending criteria, the lender will normally supply you with a certificate or letter confirming how much you could potentially borrow. You can show this document to an estate agent as proof that you have passed the lenders initial checks.
2. Obtain your credit file
It’s worthwhile requesting copies of your credit file from one or more of the credit referencing agencies. These reports will show you if any of these agencies have records of bad credit against you, or at an address you have previously lived at. If you find any incorrect entries, contact the company and ask them to add a “notice of correction” to your credit file.
However, bear in mind that each time you have a credit check done it leaves a ‘footprint’ on your credit file, and having too many credit checks in a short space of time could negatively impact your credit score. Rather than applying to lots of mortgage lenders to see who will be prepared to give you a mortgage, you can speak to an experienced ‘whole of market’ mortgage adviser first, as they will suggest the right course of action.
3. Get a credit score and maintain it
If, like many first time buyers, you have never owned a credit card or taken out a loan, lenders won’t have any way of reviewing how well you manage debt. One way to alleviate this is to apply for a credit card and use it monthly for 12 months before applying for a mortgage – but only if you’re certain you can make your monthly repayments on time.
If you have credit cards, loans or other bills, it is vital that you pay these on time to maintain a high credit score.
4. Check your address
Are all of your accounts registered to your current address? If lenders do a credit search and find credit cards or other accounts at various addresses, they may become suspicious.
5. Make sure you are on the electoral roll
Lenders usually check the electoral roll as part of the mortgage application process, so check that your name is on the voters register. If you’re not currently registered to vote, you can register via the government website.