How a Mortgage Broker Can Help
Applying for a mortgage is one of the biggest financial commitments anyone can make, but far too many people go into the process not knowing what lenders are really looking for. So, here is what they are going to focus on when you submit your application – and how professional mortgage advice from a broker can help.
Your Work
First and foremost, lenders are going to assess your ability to repay the loan by looking at your income. Full-time employees with a stable job history are typically seen as lower risk, and are, as frustrating as it can be sometimes, the benchmark to which all other applicants are compared. Of course, people earn money in a variety of ways these days, whether that’s self-employment or as a landlord. However, you make your money, share as much information about it as possible.
Your Credit Score and History
Your credit score is a big factor in getting approved for a mortgage. Lenders will check your credit report for any missed or late payments, and if you have a history of these. They’ll also assess your debt levels and see if you have been subjected to any County Court Judgements (CCJs) or bankruptcy orders. A poor credit history can result in fewer mortgage options and even rejection, so it’s a good idea to try to improve yours as much as possible before you apply.
Your Debt-to-Income Ratio
Lenders will also calculate your debt-to-income ratio. Not sure what this is? Well, the following have an effect on it:
- Credit card balances
- Personal loans
- Car finance
- Other outstanding debts
A large amount of debt compared to your income results in a high debt-to-income ratio. This can make lenders hesitant to approve you for a mortgage, as it can suggest you simply have too many things to pay off already, with little room for any additional payments.
Your Deposit Size
The larger your deposit, the better the mortgage deal you’re likely to secure. Most lenders require at least 5% of the property’s value, but a 10-20% deposit often results in better interest rates and much more choice. Plus, it will pay off in the long run, with less time before you have paid off your mortgage and fully own your home. So, if you can, try to put aside as much as you can for that deposit.
Your Spending Habits
Lenders will scrutinise your bank statements to assess your spending habits, so be prepared for every aspect of your finances to go under the microscope. They will look at regular outgoings such as rent and utilities, along with any subscriptions. Then they’ll comb over how much you spend on things like eating out and holidays. Even things like childcare costs will be factored into their financial decision. So, try to cut back on unnecessary expenses in the months leading up to your application.
The Importance of a Mortgage Broker
A mortgage broker can come in very useful. Here are some of the benefits that you can expect when you work with one:
- Access to a wide range of lenders, including those willing to lend to those who are self-employed or have poor credit
- Recommendations on which lenders are more likely to approve your application, saving you time and rejections that could harm your credit score.
- A broker will ensure that your application is completed correctly, reducing the risk of any delays or rejections.
Your Next Steps
Ready to take the plunge and apply for a mortgage? Get in touch with a broker today to find out more!
