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Ten steps to borrowing for your dream home

For many people, especially first-time buyers, actually getting a mortgage can be the most anxiety-inducing part of buying a home, but there are ways of making the process a little less stressful. 

If you take the time to understand what makes an attractive proposition to a mortgage lender, the chance of buying your own home is perhaps more possible than you might think.

Follow our ten-point guide to getting a mortgage

1.  Affordability

Simply put, mortgage lenders look for buyers who can afford to make their loan repayments, so proving this will help increase your chances. Work out, approximately, how much you can afford to borrow before approaching a lender as this will help increase the likelihood of a success application.

Generally, lenders will loan up to 4.5 times the combined salaries of the applicants. Some lenders can be more generous, with people in certain professions offered mortgages of up to 5.5 times salary.

As well as looking at salaries, lenders will also look at outgoings and existing debts. They may also conduct a ‘stress test’ to calculate the ability of the mortgagee to repay the loan in the long term. Stress tests take into account the effect of future interest rate rises and potential lifestyle changes such as, redundancy, or pregnancy.

2.   Credit score

The better your credit score, the more likely you are to be approved for a mortgage. A credit report is essentially a financial record that contains all of the information a lender needs to confirm your identity and determine whether you’re a reliable borrower. It includes a history of your credit accounts and current and past addresses too.

Check the information held on your credit file is correct and challenge any incorrect information as this could adversely affect your chances of getting a mortgage.

If you have a poor credit history, it may still be possible to get a mortgage. There are a limited number of lenders that offer these types of mortgages, usually known as sub-prime and with increased interest rates to reflect the risk of default.

The Rental Exchange is an initiative which allows private and social housing tenants to improve their credit score if they pay their rent on time each month. Tenants can connect their bank to a third party called Credit Ladder who are then able to let Experian know that you’ve made the payment on time.

It’s completely free to use and could be especially useful for students, young people and people with thin credit files to help build up a good credit history.

To sign up for the Rental Exchange, your landlord or letting agent must consent to you paying your rent using Credit Ladder. However, it’s important to keep on top of your rental payments, as failure to pay on time will negatively impact your credit score.

4.  Electoral Roll

Ensuring you are registered on the electoral roll will increase your chances of getting a mortgage.

5. Reduce debts

Reducing debts, including credit card bills, personal loans and bank overdrafts before applying for a mortgage will boost your chances of being accepted for a loan.

6.  Deposit

Currently, you need to save a minimum deposit of 5% of a property’s purchase price to get a loan. If you are eligible,  perhaps consider a government-backed savings schemes such as the Help to Buy ISA and the lifetime ISA which are designed to help you build up your deposit. Some lenders have come back into the 100% mortgage market, although it’s likely you will need a guarantor.

7. Regular income

A steady, regular income is a must. Ideally, you should be employed at your current job for at least six months before applying for a mortgage. If you are self-employed, it is standard practice to be asked to provide at least two years’ accounts.

8. Type of property

Some lenders are reluctant to lend on high-rise flats above the 10th floor. This is largely due to the quality of communal areas in high-rise properties which are usually out of the homeowner’s control and could affect the value of the property

9. Gather all your documents

To avoid unnecessary delays it is vital to have all the supporting documents for your mortgage application in order before submitting them.

10. Find the right mortgage broker

For many people, finding the right mortgage broker is the key to a successful application by helping to boost your chances of securing a mortgage.

Amathus Financial Services can help alleviate the stress by finding the best mortgage for you and providing a personalised, tailored approach.  This includes checking your credit score and submitting the correct paperwork which will ultimately help improve your chances of being approved for a mortgage.

Published on 6th November 2019
(Last updated 28th May 2021)