James Anderson is a mortgage manager at Danske Bank, and previously worked as a mortgage adviser. James leads a team of telephone and branch-based mortgage advisers in different locations across Northern Ireland.
Applying for a mortgage can be a daunting prospect. The vendor has accepted your offer, and whilst riding that high you suddenly remember the next step is to apply for a mortgage.
Many questions race through your mind and right at the top is the big one. Will my mortgage be approved?
I have pulled together six of my top tips to help put you in the best position for making your mortgage application a success.
Understand your budget
Write down all of your outgoings including how much you spend on leisure activities. Budget for saving a set amount each month and cancel those unnecessary direct debits (I’m looking at you, gym membership that’s never been used!).
In the 6 months running up to your mortgage application cut back on your spending to demonstrate that you can budget. The money you save will always come in handy for furnishing the property or for a larger deposit.
Avoid taking on too many finance agreements
Lenders will want to ensure that you can afford your mortgage now, but also if interest rates were to rise in the future. Taking out too many finance agreements, or perhaps even one large finance agreement, can impact your chances of approval.
Run your account well
How you run your bank account is one of the key indicators of how in control of your finances you are. Avoid any bounced direct debits, missed standing orders or exceeding overdraft limits. It’s even better if you don’t use your overdraft at all.
Thinking of changing employment?
Take care if you are moving employer and relying on overtime, commission or bonus payments for your application. It may be difficult to include this additional income if you don’t have a P60 to back it up.
If moving from employed to self-employed, this too could have an impact as lenders will need to see a track record of how your business has been running before being able to include that income for the application.
Understand your credit report
The higher your score, the better your chances are for having your mortgage approved. Lenders will also look at how you use your credit facilities, so it is important to review your report to make sure that it is accurate and up to date. If you spot something you don’t recognise don’t panic. Contact the company in question to have the error corrected. Better to spot the error at this stage rather than later in the mortgage process.
Speak to an expert
Speak to an expert early on – even if you are just starting to think of buying a property.
They will look at your budget and seek to understand your circumstances. Then, they will be able to give you an idea of what is affordable, and may even be able to give you a mortgage approval in principle!
It can seem overwhelming, but once you follow these tips and speak to an expert you may be closer to owning your own home than you previously thought!
James Anderson, Mortgage Manager, Danske Bank, Donegall Square West, Belfast, BT1 6JS
Please note that your ability to obtain a mortgage will depend on your personal and financial circumstances.