…is the million dollar question and one that perplexes many mortgage applicants, often more so when you go through a lengthy mortgage application process only to discover you don’t have what the lender is looking for.
So to improve your chances of qualifying for a mortgage, here are the main things your lender will be looking for from an ideal applicant and if you can get somewhere near them when you apply, you will improve your chances significantly.
- A good credit record
Your credit report will tell the bank a lot about how you handle your finances including the good and the bad. You can easily access your credit report online on websites such as Experian or Equifax. If you have a poor credit score, then this is going to have the biggest impact on your ability to get a mortgage even if you earn the required income. Your credit record can be improved in a number of ways and it is worth taking the advice provided to improve your score over time by keeping on top of any credit card and loan repayments.
- You are registered to vote
This will influence your chances in 2 ways, being on the electoral roll helps your credit score and also satisfies the banks that you have a fixed address. So whatever your feelings about the political parties today, it pays to be a good citizen and be registered to vote if you want to improve your chances of getting a mortgage.
- Some lenders are just not into you
You may have been with your bank for decades, but this makes no difference at all to your chances of getting a mortgage. Some banks are far stricter with their mortgage qualification criteria than others. Some won’t entertain anyone who doesn’t have an all star credit rating and a lots of spare income.
- Applicants who pay their bills on time
This really cannot be stressed enough. Late payments and unpaid debts are going to impact heavily on your ability to get a mortgage. Banks don’t look kindly at all on applicants who can’t even manage their small debts and then think themselves capable of taking on a major financial commitment for 25 years or more.
- Applicants who have a steady job
If you are newly self-employed then you may have a mountain to climb to try and get a mortgage. In the old days when mortgages were handed out like confetti a self cert for income was enough but this sadly isn’t the case anymore. Lenders usually like to see a long track record of self-employment with a strong net profit for each year of trading.
Unfortunately for many self-employed people income can be volatile and it can easily appear like income is insufficient to make payments. Full time employed people can also find it difficult if they have changed jobs frequently or if a lender concludes they don’t earn enough to afford a mortgage.
- A big deposit
If you have a substantial deposit to put down over and above the minimum then this will do a lot to improve your chances of getting a mortgage.
- Low or no debts on credit cards and overdrafts
If you have debts on several credit cards, you will need to disclose them during your mortgage application. The best thing to do is clear your credit card debts where possible before applying to reduce your credit and improve your credit score. The same applies to overdrafts which essentially means you are already spending the banks money each month before taking on a mortgage.