Whether you are thinking of buying property in London or looking at prospective property in Newcastle, you have to think carefully about your application for a mortgage. When you apply for a mortgage, there are many aspects to consider, and you also have to make sure that you have a good amount of deposit to put down. One rule of thumb: the higher the deposit you make, the better your mortgage deal is likely to be.
But before you submit your application for a mortgage, it also pays to have a good idea of what lenders will be checking before they give their approval. This way, you can be adequately prepared.
- Checks on affordability
All – and we mean all – lenders will be checking out how much you may be able to afford in order to borrow from them and repay them when the time comes. Granted, these checks on affordability may vary from one lender to the other, since some lenders may be more stringent and stricter, but they will usually agree to lend you somewhere around three to about five times what you make. Additionally, many lenders will do a test on their calculations just to see if you will be able to weather increases in interest rates, increases in expenses, and a decrease in your income – just to see if you would still be able to make your repayments in different circumstances.
- Your credit score or rating
Another aspect that lenders will be looking into is your credit score or rating, and this includes your history. They will want to know how much debt you have had in the past and how you were able to settle your debts or credit. If you have a good credit score or rating, you need not worry – as long as you have been able to keep up with your payments, your rating will be good. Interestingly, lenders also look more favourably on those who have (or have had) debt and have been consistent with their repayments than on those who have not had any debt at all.
- A property valuation
Lastly, before the lender agrees to your mortgage application, they will conduct a property valuation just to confirm whether what you are paying for the property is really worth its value. More often than not, you may incur charges for this, but it can also be for your benefit as well so you really know what you are paying for.
Get advice from a mortgage broker who has experience in the area or location you have in mind. A London mortgage broker, for instance, should be able to give you good recommendations and even inside tips on lenders to help you with your mortgage application.