11 Jan 2019
How to Get Approved for Your First Mortgage
Taking out your first mortgage will be your single biggest financial commitment that you will ever make in your lifetime. So, it’s crucial that you find the best deal possible. There are many things to consider when looking at buying your first home, but we have prepared this short guide to help take the big step onto the property ladder.
If you are thinking about how to secure your first mortgage, some significant factors come into it including credit scores, outstanding debts, your employment status and the size of the deposit for the mortgage.
Do Your Own Sums
First things first, you need to determine your budget before applying for a mortgage. This is essential as you need to be sure that you can borrow enough money to cover the purchase of the property together with the associated costs of moving in. Our mortgage calculators can help you see just how much your first mortgage will cost and show you personalised quotes depending on your current financial situation. Click here to visit our calculator to see how much you can borrow.
Most mortgage lenders like to see that you have been with the same employer for a significant period. So, if you are in the balance or thinking about looking for a new job while considering applying for a mortgage, we would advise you to get your mortgage secured first.
Your Credit History
Before applying with mortgage lenders, it is paramount that you obtain a copy of your credit report. This is so you can observe exactly what lenders will see when you get around to applying for your mortgage. Your credit score/situation will determine what lenders will be open to lending you money, as it shows a picture of your reliability to pay back the money. You can find out your credit score from websites such as Experian and Clearscore, or for a full picture, click here to visit Check My File, where you can download one report showing information from Call Credit, Equifax, Experian and Crediva, and will give you a comprehensive view of your credit situation, both historic and present*.
Proving Your Income
Mortgage lenders will always want to see proof of your income. If you are employed, this will more than likely be in the form of your latest P60, 3 months payslips and 3 months bank statements. For those of you who are self-employed, you will probably be asked to provide 3 months bank statements and at least 1 years accounts or Tax Calculation with corresponding Tax Year Overview. This is to ensure that you are in receipt of a regular income and will be able to maintain mortgage repayments over the course of the term of the mortgage.
Before applying for a mortgage, it can be beneficial to try and reduce any outstanding debts in your name, as this not only increases your affordability (as you have less monthly commitments), but also helps demonstrate to a lender that you can effectively manage your own money. However, bear in mind that paying debts off may eat into your deposit. Our calculator can show you how much we feel you would be able to borrow with the commitments still in place, but it’s always best to speak to an adviser for professional advice before taking any steps.
Not only will you have a wider choice of prospective mortgage deals if you have more money to put down as a deposit, your monthly repayments will also be lower. First-time buyers are generally advised to plan way in advance if they are planning to buy their first home to ensure they can put down as much as possible to keep their monthly repayments as low as possible.
Securing a Mortgage with Someone Else
If you don’t think that you can save up enough money for a deposit on a mortgage, then an option for you could be to buy with somebody else. However, this is a big decision to make if you consider the prospect of them potentially wanting to move out in the future. So, it's important to discuss the commitment in detail before you approach any mortgage lenders or accept any mortgage deals. It is also vital to consider that you will both be ‘Jointly and Severally’ responsible for the mortgage repayments. In short, if the other person suddenly decides to stop paying their share of the mortgage, you will be fully liable and responsible for maintaining the full monthly repayments on your own.
If you would like to use MO as your online mortgage broker, then please visit our Application page to see how much you could borrow. MO compares 1000s of mortgage deals from over 130 different lenders. So, you might be able to find yourself a great deal on a mortgage.