How to Prepare for a Mortgage Application

What's Included?

Get your paperwork organised

You must show the lender proof of income and ID to get a mortgage. Preparing your documents early and sending them all at once is a good idea to speed up the process. Some lenders won’t accept self-printed Internet bank statements, so ask your bank for original copies ahead of time to avoid delays.

Your lender may request to review some or all of the following:

Please provide the following documents:

Bank statements from the past three months
Payslips from the past three months
Evidence of any bonuses or commissions earned
The most recent P60 tax form displaying income and taxes paid
If you are self-employed, please provide tax returns or accounts from the past three years
Proof of deposit, such as savings account statements from the past three months
Identification documents, such as a passport or driving licence.
Please provide proof of your address (such as utility or credit card bills.
A gift letter; If someone is helping you with your deposit, the lender will require a letter stating that they do not own the home and the money is not a loan.

Register on the electoral roll

One of the easiest and fastest steps in preparing for a mortgage application is ensuring you are registered on the electoral roll at your current address. This is crucial because lenders frequently rely on the electoral roll information to verify your identity, and being registered can boost your credit score.

To register, please click on the link provided here.

Stay out of your overdraft

Lenders may hesitate to approve your application if you have been in your overdraft within the past three months. Hence, it can be a concern if you are frequently in your overdraft.

Don’t apply for credit shortly before making a mortgage application

You should not apply for credit for at least three months before applying for a mortgage to avoid impacting your credit rating. Getting new loans or increasing credit card balances could also reduce the amount you can borrow. To be completely safe, some suggest waiting at least six months.

If you want to apply for credit, making one application is usually not too harmful if the payments are manageable. However, if it’s a payday loan, taking one out in the last year could cause some lenders to reject your application for a mortgage.

We highly recommend that you avoid obtaining new credit from when your mortgage offer is issued until you close on your new home. In case you do, make sure to inform the lender, as this may cause a change in the amount they have agreed to lend you.

Manage your payments and spending

To increase your chances of getting a mortgage, ensure you make the minimum repayments on your credit card or loan and avoid nearing your credit limit. Also, steer clear of missed or defaulted payments, payday loans, County Court Judgements (CCJs), and any gambling activity that appears on your bank statements. If you have difficulty making loan payments due to the current situation, you should talk to your lender about taking a payment break. If you discuss this with them in advance, it should not harm your credit score.

Even if you’re still searching for a property, it’s advisable to continue building your savings. Ensure you store your savings in your accounts rather than entrusting them to your loved ones for safekeeping.

It’s important to remember that there may be additional costs to consider when purchasing a new home, such as Stamp Duty and solicitor’s fees. Make sure to factor these expenses into your overall budget.

Check your credit report before you apply

Before approving your mortgage, lenders will check your credit file, paying specific attention to your payment history to evaluate your financial management skills.

Your credit report includes information about your past and current credit cards, loans, overdrafts, mortgages, mobile phone bills, and utility payments from the last six years. In the UK, there are three primary credit reference agencies. With the Credibble Home app, you get your credit rating built-in for free!

If there is inaccurate information on your credit report, you can dispute it for correction. Your first step should be to contact the company responsible for the mistake.

People who are financially linked to you could affect your credit score

If you apply for joint credit, like a bank account, mortgage, or loan, you can become financially associated with another person. In this case, lenders will review your and the other person’s credit history when you apply for the new credit. This means any missed payments or defaults made by the other person could reduce your chances of approval.

If you are no longer in a relationship, closing joint accounts or removing your name from them is vital to avoid future financial ties.

It is also advisable to request a notice of ‘disassociation’ from the credit agencies by writing to them.

Consider how you’ll protect your new mortgage

Once you have purchased your new home with a mortgage, it’s essential to consider the potential consequences if things don’t go as expected.

Having protection means that you and your family can afford your mortgage no matter what happens in the future. This provides you with options to deal with any unexpected challenges. You can choose between life cover, critical illness cover, income protection, or a combination to ensure your future security.

Get yourself into the best position for a new home! With Credibble Home, applying for a mortgage and finding your perfect home has never been easier! Download the app now and take advantage of all the tools, resources and support it offers. Get to your first home with ease!

Frequently Asked Questions

1. What documents do I need to apply for a mortgage?

You will need to provide proof of your identity, address and income when applying for a mortgage. This can include your passport or driving licence, utility bills and payslips. ¹

2. How much deposit do I need for a mortgage?

The amount of deposit you need for a mortgage will depend on the lender you choose and the type of mortgage you are applying for. However, as a general rule of thumb, you should aim to save at least 5% of the property value as a deposit. ²

3. How can I improve my chances of getting approved for a mortgage?

To improve your chances of getting approved for a mortgage, you should make sure that your finances are in order, avoid applying for too much credit at once, and work on improving your credit score if necessary. ³

4. What is an agreement in principle?

An agreement in principle, is a statement from a lender that says they would be willing to lend you a certain amount of money based on your provided information. It does not guarantee that you will be approved for a mortgage, but it can help you understand how much you could borrow.

5. How long does it take to get an agreement in principle?

The time it takes to get an agreement in principle will depend on the lender you choose and how quickly you can provide them with the information they need. However, as a general rule of thumb, it can take around 24-48 hours to get an agreement in principle.

6. What is the difference between fixed-rate and variable-rate mortgages?

A fixed-rate mortgage has an interest rate that stays the same for a set period of time (usually 2-5 years) whereas a variable-rate mortgage has an interest rate that can change over time. ⁴

7. What is stamp duty?

Stamp duty is a tax paid when you buy a property over a certain value in England (United Kingdom). The stamp duty you pay will depend on the value of the property you buy.

8. How long does it take to complete on a house purchase?

The time it takes to complete on a house purchase will depend on several factors, including how quickly your solicitor can complete the legal work and how quickly your lender can process your mortgage application. However, as a general rule of thumb, it can take around 8-12 weeks to complete a house purchase.

9. What is conveyancing?

Conveyancing is the legal process of buying or selling property in England (United Kingdom). It involves transferring ownership from one person to another and meeting all legal requirements.

10. What should I do if I struggle to get approved for a mortgage?

If you struggle to get approved for a mortgage, you should speak to an independent financial advisor who can help you understand your options and find the right solution for your needs

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