Getting your house in order
First published 16 February 2015 • Updated 25 July 2017
Arranging a mortgage can be a stressful process. So if you’re buying a home, do some homework first and you’ll keep those stress levels down. Armstrong Watson Financial Planning have some tips.
The days when virtually anyone could secure a mortgage are long gone. Today, lenders generally insist on rigorous checks to ensure that you can afford your repayments, not only now but in the future. It’s not enough to be sure yourself – you have to be able to convince them. So before you start your application process, give your credentials a spring clean.
All of the following can help to increase your chances of securing the best possible mortgage for you.
- Make sure your credit file is in tip top condition. Any defaults or County Court judgements will impact on your credit score, which will significantly influence how much a lender will let you borrow – or even deter them from lending to you at all. If you’ve been late with a payment, this may also have an adverse effect, so make sure that what is on your credit file is accurate.
- If you can, try to reduce your liabilities by paying off some or all of your debts before applying for a mortgage. This will help to reduce your outgoings and so could help in the affordability assessment that lenders now make.
- Save, save, save! The larger the deposit you have available, the better your chances of securing a lower interest rate. Also make sure that the purchase price and repayments are within your means.
- Be clear about the costs involved. There will often be additional fees to take into account, such as lender’s arrangement fees, solicitor’s fees, surveys/valuations and also (if you’ve used one) a mortgage broker’s fee. Stamp Duty could also be payable, depending on the property’s value. Don’t forget to plan for removal costs, and any additional furnishings, decorations or renovations that your new home may need.
- Get your paperwork in order. You need to ensure that you are on the electoral roll at your current address and that all your identification details match. If these don’t stack up, this could cause delays or problems with the lender. If you’re employed, make sure you have up-to-date pay slips and your latest P60; if you’re self-employed, you’ll usually need your last three years’ accounts.
- Allow plenty of time. Most people find that moving home is one of the most stressful and busy times of all, so ensure that you have planned enough time to arrange your mortgage and to buy your property. Typically it takes around 10 weeks.
- Consider applying early. You can obtain a mortgage decision in principle, although you should note that some lenders will register this on your credit file, and if the offer on your prospective new home is unsuccessful, it cannot be removed.
Remember, an independent financial adviser can research the whole of the marketplace to find the most suitable product for you, and will often have access to a range of products that aren’t available on the High Street. Search for your local adviser here.
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About the author
Armstrong Watson is a firm of Chartered Accountants, Financial Planners and Wealth Managers.