Make Yourself Appealing to Mortgage Lenders

For a year and a half now, the latest affordability rules have been making it harder than

ever before for would-be home buyers to get the approval of mortgage lenders. Those

rules aren’t going away any time soon, but there are several things that you can do to

make yourself more appealing as a borrower and more likely to get a yes out of the

lenders.

The Basics

A few of the most basic steps can also be among the most thoroughly worthwhile. They

are essentially the kind of steps that get your credit score in order. Make sure your bills are

paid on time, register on the electoral role, and clear any loans you already have (in

particular, try to ensure you are as far-removed from payday lending as possible). Start to

put some of your spending on a credit card and then promptly pay it off in full to build a

profile as a reliable borrower.

Tip Your Income/Expenditure Balance

Lenders now look at your income and expenditure in great detail before deciding whether

to lend, so make sure the balance between the two is tipped as far in favour of income as

possible. Eliminate all outgoings you can do without for a good few months or, preferably,

a year or more before your application. This might even include things like voluntary

pension contributions, as in the eyes of lenders these are still a financial commitment. If

you are self-employed, talk to your accountant about how to maximise your verifiable

income.

Get Organised

Lenders will want to see a fair bit of documentation, so make sure you have it ready for

them. Keep a file with your bank statements from at least the past year, requesting

replacements for any missing statements from your bank. Also include at least 3-6 months

worth of payslips (if you’re self-employed, this should instead be three years of books, tax

returns, or SA302s). The file should also contain a photocopy of your passport and a utility

bill, along with a detailed summary if your incoming and outgoing finances.

Avoid Overdrafts

This comes into the same category as paying off any debts, but in many ways is also

different. Overdrafts don’t just look like a form of borrowing to lenders, but like a sign of

poor financial management. Make sure you avoid going overdrawn. If you have a current

and savings account with the same bank, it may well be possible to put an arrangement in

place that would see funds automatically moved over from your savings account when

necessary to avoid an overdraft on your current account.

Help With Deposit

If you are getting help with the deposit, for example from your parents, then it must be

classed as a gift rather than as a loan. Otherwise, repaying it will be seen as a financial

commitment and will count against your affordability assessment. In order for the lender to

classify it as a gift and not as a loan, the person who is giving you the money must provide

a written declaration stating that the money is being given as a gift, as well as evidence of

where they have taken the money from (most commonly a bank statement that shows the

money being transferred out).

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Hopwood House are specialists in property investment, with a large range of investment

opportunities including student and buy-to-let property for sale.

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