A house will likely be the single largest investment you ever make. The better positioned you are to handle the responsibilities – financial and otherwise – that come with homeownership, the easier and more rewarding the process will be. With that in mind here some tips before applying for a mortgage.
DETERMINE HOW MUCH YOU CAN AFFORD TO SPEND
This one leads off because if you get this wrong your dream of homeownership will quickly turn into a nightmare. If you apply for a mortgage that’s out of your range you’ll be rejected and your credit score will take a hit. As a general rule, a mortgage should not exceed 4.5 times your annual salary.
VERIFY YOUR CREDIT SCORE
If you have a history of bad credit you will likely need to repair your credit score before you apply for a mortgage. But check your score regardless. Just keep in mind that different credit rating agencies have different scoring systems. For instance, a good score with Experian is 881-960, and with Equifax, it’s 420-465.
DON’T OVERLOOK CONVEYANCING
The purchase isn’t final until conveyancing is complete, and conveyancing brings with it a slew of fees as well as the Stamp Duty. Even for a relatively inexpensive home conveyancing can add up to several hundred pounds.
Don’t even think of applying for a mortgage if you don’t have all your paperwork in order. You’ll need recent bank statements. You will also need to declare if you got part of your deposit from someone else, like a parent. Your address should be the same on all your documents. And if you are self-employed you will have to prove how much you make.
SAVE AS MUCH AS YOU CAN
The more you save for your deposit the less money you will need to borrow. The less you need to borrow, the more attractive you will be to prospective lenders. So be patient and save as much as possible before applying for a mortgage.