The do’s and don’ts that affect your chances of securing home finance

Michelle Niziol, director of IMS Independent Mortgage Solutions and property finance expert, advises on what you should do you make sure you are as prepared as possible when applying for a mortgage

If you have never applied for a mortgage before or are looking to remortgage and haven’t gone through the process for several years, it can seem quite daunting.

Depending on what decision is made regarding your loan, the future of your house purchase lies in the lender’s hands.

We want you to meet your lender or broker confidently knowing that you have given yourself the best possible chance of securing your loan.

I would advise that at least six months before you apply for a mortgage, tighten up on your spending habits and start to prepare for that all important decision. Changing your spending behaviour will increase your chances of having your mortgage approved, plus it will make you more financially responsible which is never a bad thing in my eyes.

I get asked all the time for advice and tips on what people should be doing when applying for a mortgage, so, here are my top tips:

DO always pay your bills on time
It sounds simple, but not paying your bills on time damages your credit history. Setting up direct debits and standing orders for as many bills as you can will really help create a better credit history. Late payments, missed payments, defaults are all things that a lender looks for when deciding on whether or not to go ahead with a
mortgage application.

DO check your credit history before your lender or broker does
I always request that a client brings a copy of their credit report with them to one of our meetings. Experian and Equifax are credit referencing agencies and offer a free 30-day trial if you haven’t set up an account with them before; while Callcredit’s service is free. Getting a credit report is a great way to see how you are managing your finances and to ensure that your personal details are not being used fraudulently to obtain credit without your knowledge.

DO make sure you are on the electoral register
Lenders use the electoral roll data for identity checks, whilst you can have a perfect credit score without being on the electoral roll it really helps lenders identify who you are and how long you have been living at the property. It builds up a really good picture of you as a person, so lenders feel more confident to lend to you. If you are unsure as to whether or not you are on the electoral roll, your credit file will confirm this and you can check with your local council.

DO get into the habit of saving
Set up a monthly standing order of whatever you can afford and try not to touch it. Being disciplined and putting money aside shows the lender that you have that emergency pot just in case you ever need it.

DO prepare the following paperwork ahead of your meeting
When you attend your mortgage application meeting, your broker or lender will ask you to bring a number of documents with you such as:

• Passport/driving licence (for money laundering ID purposes)
• Latest council tax bill OR utility bill dated within the last three months (for money laundering ID purposes)
• Last three months consecutive pay slips
• Last three months consecutive full bank statements, this must be the account where your salaries are credited
• Your latest P60
• Credit report, e.g. Callcredit/Experian/Equifax
• Latest mortgage statement (if it is applicable)
• Proof of deposit (if applicable)
• If you are self-employed – ideally a minimum of two years accounts
• If you receive tax credits or child benefit – tax reward letter
• If you receive a pension – your latest annual pension statement

DON’T apply for any other credit just before you apply for a mortgage
Just be careful how many credit searches you have before applying for a mortgage, lots of credit searches can affect your credit history. Also just make sure you are happy with your lender or mortgage broker before allowing them to do credit searches.

DON’T go over your authorised overdraft limit
You really must be mindful of managing your money. Lenders will need to see bank statements as part of a mortgage application, they will be looking for good account conduct. If you are using an overdraft, make sure you are not going over your authorised overdraft limit.