Getting your First Mortgage Application approved
Getting the ball rolling with your first mortgage doesn’t have to be the uphill struggle that a lot of people make it out to be. Read on and find out how!
Completing a mortgage application doesn’t have to be difficult. If you’ve got a solid income, decent credit score and you can manage your outgoings it’s going to be way more likely for you to get the mortgage that you want. Read on if you want some bite size, friendly advice to make the move into your first home much more simple!
Mortgage Application Q&As
Will I be able to afford mortgage repayments?
A cornerstone of pretty much any mortgage application is whether you have earned enough money to cover your monthly repayments. Lenders typically let you borrow an amount around four to five times your annual income so make sure that you roughly factor this into your budget when you’re out house hunting. lthough this is a simplified view & many other factors are taken into account when run through a complicated algorythm, it's a decent guide. But, don't forget to allow for credit repayments. For example:
£40,000 income equates to a mortgage of £160,000 to £200,000 as a very rough guide.
However, if you have loan repayments totalling £500 per month then you need to multipy this by 12 to get your annual payment amount & deduct it from your income so .........
£40,000 income less £6000 (£500 x 12) = £34,000. This equates to a mortgage of £136,000 to £170,000 as a rough guide.
Other factors such as dependents will come into play but, as a rough guide, it gives you a starting point. As an advisory point, work on a maximum of 4.5 times income as 5 times income is reserved for those with large deposits / equity & squeaky clean credit history.
Also, if you haven’t considered it yet, have a look into getting a joint mortgage. This is because on a joint mortgage application, lenders will let you borrow an amount that is a multiple of your total house income. So, you guessed it, it will mean that you could potentially borrow way more than you would be able to on your own!
Will I be able to afford a mortgage deposit?
Saving up for a deposit usually tends to be a rather large thorn in the side of most first time buyers. However, if you opt to pay a smaller deposit amount then you will need to cover more of your property’s price throughout your mortgage term.
Most mortgage deposits / equity are normally a minimum of 10% of the property price / value. If you are a first-time buyer, it is possible to get deposit amounts at 5% of the purchase price.
What do affordability assessments involve?
When you’re completing a mortgage application, affordability assessments are essential to the process. As well as covering your salary, the assessment will also check over whether you spend your money within your means and see if you have a good credit score.
While the former two are slightly more self-explanatory, ensuring that you have a good credit score when completing your mortgage application is going to be vital for you to get the mortgage deal that you really want. If you have a bad credit score then most lenders are only going to offer you a deal with a high-interest rate & with a larger deposit / equity.... if any at all. This will compensate for the risk that you might pose as someone with a poor borrowing history.
How can we help?
At Mortgages Online we can offer you impartial and free mortgage advice that can help make your first mortgage application a lot easier! We compare thousands of deals from loads of different lenders to ultimately find the one which will be best suited to you. So, use our service to see what sort of mortgage you could get!
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