With the introduction of the Mortgage Market Review (MMR) in April, borrowers hoping to apply for a new mortgage or change their existing deal are now facing stricter affordability tests to ensure that they can afford their loan repayments.
The changes in the application process now see would-be borrowers being asked to give more in-depth details about their spending, ranging from what you spend on bills, to discretionary expenditure such as holidays and eating out.
So with stricter criteria, how can you boost your chances of having your application accepted?
Whilst they can only give an indication of what you should apply for, affordability calculators are common amongst most mortgage websites and you can enter your details to ascertain what sort of amount you can look at realistically borrowing.
Cut Back on Non-Essential Spending
With lenders now looking more thoroughly at your bank statements, the earlier you get your finances in order, the better. Try not to exceed your overdraft limit or go overdrawn for six months before you apply.
Try and ensure that your bank balance doesn’t decrease by too much in the months leading up to the application, either.
Prior to the introduction of the MMR, lenders would just ask for information on your monthly debt repayments and other essential expenses.
However, this is not the case anymore and now lenders need even more detailed information such as your expenditure on child-care or weekly grocery shopping.
The future also plays a part in your application, with lenders asking you if you are considering starting a family or starting up your own business.
Though, if you are only considering these at the time of your application, you are not obliged to tell your lender.
Your Credit Score
Doing simple things like ensuring that you are on the electoral roll can boost your credit rating, thus putting you in good stead with your lender.
Make sure that you look through your credit file, checking and re-checking again for any mistakes that you may come across.
Credit reports are extremely important when applying for a mortgage and most lenders rely on the information sent on to them from a credit agency, so make sure that you correct any problems beforehand.
Companies such as Experian, Equifax and Callcredit all offer services in this area.
Pay off any Debts
How much you owe on any personal loans or credit cards also play a factor when a lender goes to assess your finances. Pay any debts off as soon as possible before applying for a mortgage to remove them from the equation entirely.
There are lot of new procedures in the mortgage application process and seeking help from a professional independent mortgage broker is essential in securing the right deal.
Ryder & Dutton Estate Agents work with Mortgage Advice Bureau to provide independent mortgage advice.
Our advice is totally independent and will be specifically tailored to your needs and circumstances which could be for your first home, moving home, investing in property or remortgaging. To find out how we could help speak to us on 0161 655 6633.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
Article: Mortgage Advice Bureau