Applying for a mortgage – Things you must consider
If you’re thinking of applying for a mortgage, there are a number of factors you must take into consideration beforehand, the main thing being your finances. You will need to get your finances in order before you get started with speaking to lenders. This is imperative, and there are a number of other things to consider before you make a start on this process.
Save for your deposit
Simply put, the larger your deposit, the better the rate you could get on your mortgage. You will also have access to a range of better deals. You can get a mortgage with a 5% deposit as a minimum, but it’s in your best interests to aim for 10% and higher. The best deals are reserved for applicants with 35%+ deposits, so cut down on unnecessary expenses and save as much as you can.
Register to vote
Many lenders use this method to verify your identity and your address. It’s one of those jobs that can be forgotten, but it’s easy to rectify if you’re not registered. All you need to do is contact your Local Authority, and ask for a registration form or even sign up online.
Shape up your credit history
There are a number of things you can do to get your credit history in better shape. You should close any unused accounts, especially if that account is held with someone else. Pay off any debts and bills on time, and where possible, avoid going into your overdraft. It’s important that you don’t take on any additional credit, payday loans especially. Many of these pointers are really simple to achieve, and will give you a much better chance of getting a mortgage.
Get documents prepared
When applying for a mortgage, you are required to provide various documents that prove who you are, your address and your income. As a rule, lenders will ask you to provide the following documentation:
- Proof of three months’ worth of income (payslips)
- Last three months’ bank statements
- If you’re self-employed it will be three years’ accounts or tax returns in addition to your Self Assessment tax return
- A document such as a utility bill proving your address (dated in the last 3 months)
- Latest P60
- Proof of your deposit (savings account statement, or if you’re being gifted the deposit from a family member, a gift letter)
- Proof of ID (driver’s license or passport)
Gathering these documents before you make the application, will save you a lot of time.
Do your research
Know in advance what kind of mortgage you would like and shop around – they come in all forms. Each circumstance is different and there’s no one size fits all, so knowing what’s out there is a great idea. A good move would also be using a broker, as they can offer an expert service and have access to deals that are not available directly.
Draw up a will and get life insurance
This is the perfect time to think about life insurance and drawing up a will. If you’re buying with your partner or family, getting mortgage life insurance is a fantastic idea to safeguard your family against payments they can’t afford if you pass away. Once you’ve committed to a mortgage for the long-term, it makes total sense to get a will written. By getting this document sorted, you ensure the decisions regarding your estate are in your hands, and you can make sure your family is taken care of, and record your wishes for all to see.