Preparing for mortgage applications can be a nerve-racking time, even more so for those who might have a bad track record when it comes to finances. Getting yourself into the best financial position for making those applications is a must.
Before making any applications for credit, it is important you know what factors have impacted yours and where you sit on the scale of bad to good. Mortgage lenders will use your credit score to determine if you’re reliable. For those with bad credit, you can still apply for a mortgage, and don’t let this stop you from remortgaging if that is the position you are in.
Do a check, take a look at the factors, and see what you can improve, expunge, or reduce.
Loans, mortgages, BYNP, credit cards, overdrafts, and loans impact your score.
Whether you vote or not is not the question – some lenders will decline to lend to people with a perfect credit score if they are not on the electoral roll. The electoral roll data is used when lenders run an identity check – and if you’re not on it, they might question if you are who you say you are.
Your credit score will show you if you’re on the electoral roll, but if you’re not, you can go to the website or council building and put yourself on it. Ideally, do this at least a month before t making applications.
Any unused old credit accounts are better off closed; however, there are times when cancelling accounts will negatively impact your credit. Your credit needs to be stable, and sometimes older accounts that are paid up can work in your favour.
In the run-up to making your mortgage applications, don’t make any other credit applications. Every time you make a credit application, you will have a search on your file. Soft searches don’t harm your credit score; however, a hard search will show up.
For the times you absolutely have to apply for credit, make sure it is affordable and worked into your budget. Unfortunately, people who have taken a payday loan are often declined or a mortgage if it was within a year of the application.
And overdraft is incredibly useful, but if you are in your overdraft regularly, it can be taken as you live at the very edges of your finances. The lender will question how responsible you are with money.
If you are often in your overdraft it might not be the right time to make an application. Ideally, you’ll need to be out of the overdraft for at least three or more months.
You’re going to need a pile of paperwork, and since we live in a digital world – it is better to start requesting these as soon as possible. Here is what you are likely to be asked for:
- Three months bank statements
- Three months of payslips
- Your P60
- Saving account statement
- ID, most often a passport
- Three years of tax returns or accounts (self employed)
Once you have everything in order, start looking for the best deals. Preparation can make the whole process a lot easier. And one thing you can never forget is to save: How To Save Money When Buying A House – chelseamamma.co.uk!