Five tips to make the mortgage application process simpler
Found your dream home? We'll help you through the new mortgage application process
Spring's in the air and you're ready to make a move - either into your first home or a new home. At The Nottingham we've been lending people money to buy their homes for more than 160 years. Now new mortgage lending rules have come into force we're on hand to guide you through the process.
So whether you're applying for a mortgage for the first time, or as an old hand at the house buying process, here's our tips on how to apply for a mortgage and make it simpler.
1) Before you go house hunting, get a 'Mortgage in Principle'
If you've had a mortgage before then you'll probably notice a lot of changes since you last moved home. From 26 April 2014, new mortgage lending rules came into force under what's known as the Mortgage Market Review (MMR). These rules are designed to make sure you don't borrow more than you can comfortably afford and could mean you can't get the mortgage you expected. If you're a first time buyer, and you've saved your deposit and are all set to go, your first step onto the property ladder may even be delayed.
Our tip: Before you set your heart on a new home see how much you can borrow by speaking to our mortgage advisers. They'll give you an indication of the maximum mortgage amount and term you're likely to get and they can get you a 'Mortgage in Principle' (also known as a Mortgage Agreement in Principle.) This shows estate agents - and the people whose house you're interested in - that you're serious about buying. It's free (most lenders will carry out a credit check for an AIP, although a basic affordability check doesn't normally involve any credit checks).
2) Get all your paperwork together
Before the new rules were introduced the amount you could borrow was usually worked out by multiplying your household income. And whilst how much you earn still plays a major part in the calculation we now also need to know how much you spend; on bills, food, childcare, credit cards, car finance or loan agreements, going out etc. You'll have to provide more evidence than before, including a minimum of three months' most recent payslips and proof of any bonuses, 3 months most recent bank statements, showing your salary credits, if you're in receipt of any tax credits, we'll also need to see your award letter. If you're self-employed, we'll ask to see your two most recent sets of accounts and your SA302 statements
Our tip: Start to put together a file that supports your mortgage application. As well as your payslips or accounts include bank statements and anything else that proves what you earn and what you spend. Make sure you bring it with you to your interview.
3) Boost your deposit
As well as your disposable income we'll need to see how much deposit you have to buy your home. Usually first time buyer mortgages are available with a 10% deposit, however our team of mortgage advisers can sometimes source first time buyer and home mover mortgages for as little as a 5% deposit.
If you're moving home then your deposit will come from the equity in your home. Generally, the larger the deposit the greater the variety of mortgage deals available to you, the better the rate and the lower your monthly repayments. Our mortgage advisers can provide unbiased advice and talk through all the best options for you.
Our tip: If you're struggling to save a deposit you could think about getting some help from your family. We don't just offer you mortgages from the Nottingham, we search over 40 lenders to get you the most suitable mortgage and there are a range of products on the market where family members can either act as guarantors or secure their savings against your loan.
4) Allow plenty of time
One of the most frequent questions we get asked is "How long does it take to get a mortgage?" As we now have to find out more about your personal circumstance before deciding which product suits you best, mortgage applications now take longer. Remember though, we're trying to get the best possible mortgage for you but from an initial interview (which could last as long as two hours) to getting a final decision, typically it takes between two to four weeks to get your offer.
Our tip: Before you sit down with one of our mortgage advisers work out how much you think you can afford to spend each month by writing down your income and outgoings. It'll save you time at your mortgage interview and may even speed up the entire process.
5) Improve your credit history
The better your credit history, the more likely it is that you'll be able to get a mortgage. If you've never taken out a mortgage, loan or credit card you won't have a credit history so you'll find it harder to borrow the money you need. Also, if you've had problems repaying debt, especially in the recent past, then you'll also find getting a mortgage difficult. You'll need to build up a positive credit history and this may take some time. You could think about taking out a credit card and spending small amounts on it. But in order to develop a good credit rating you must repay the amount in full every month.
Our tip: The Money Advice Service has some excellent online advice about ways to do improve your credit rating. It's free, totally impartial and easy to use too.
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If you'd like to know more applying for a mortgage book an appointment with one of our advisers today. Pop into your local branch or call 0344 481 0013.