7 Steps of how to get a Mortgage in the United Kingdom
Home ownership is hard. It’s becoming increasingly difficult with the rising house prices and mortgage rates, but it isn’t impossible. Whether you are a Lottery Finder UK product owner, or an employee, you can get your mortgage approved.
According to Product Owner – Tony Sloterman, your chances of getting a mortgage are higher when you have everything in order before applying. So, while it can be challenging, there are certain steps you can take to increase your chances of getting approved for a mortgage.
Review Your Spending
The first thing you need to do is get your spending in order. The reason this is important is first so that you can save towards your down payment. The down payment is a percentage of the overall value of the property you want to purchase. And the higher the down payment, the wider your choices and the lower your interest rates.
So, at least six months before applying, you should cut down on excessive spendings like pastime fun activities, some of the subscriptions you don’t even use, and other spending. This is to assure the lender that you have a good financial culture and, thus, can repay them.
Review Your Credit Reports
Your credit score is very important when getting any loan, especially heavy loans like mortgages. The lender will check your credit reports so that you might check them before them.
You can apply to review your report with either of the three main credit reference agencies; Equifax, Experian, and TransUnion. Check for discrepancies with your financial accounts and payment history. If there is any, have it rectified.
Find Out How Much You May Be Able To Borrow
You need also to find out how much you can borrow as an individual or with a joint buyer. Typically, lenders generally lend 4.5 times your total annual income. Therefore, if your total annual earnings (as an individual or jointly) is 50 thousand pounds, you can get up to 225 thousand.
However, some lenders give allowances for higher income brackets or certain professions like doctors and architects. Halifax, for instance, can lend you up to 5 times your income if you earn 50 to 75 thousand pounds.
Note that you don’t have to borrow the maximum amount; stick to what you need.
Choose a Mortgage Type
Carry out extensive research on the pros and cons of the different types of mortgages so you can make an informed decision. The types of mortgages include:
- Fixed
- Variable
- Repayment
- Interest-only
- Tracker
You also need to determine your preferred mortgage term. The longer the term, the lower your monthly repayment but, the higher your rates. So, research and determine what works best for you.
Get Your Paperwork in Order
Work out your papers before applying for a mortgage. Usually, the lender will check the following;
- Proof of Identity
- Utility bills
- Bank statements for 3 to 6 months
- Proof of income for up to 3 months
For self-employed applicants, you will need the following;
- Two years’ self-assessment tax return forms (SA302)
- HMRC tax year overviews
- At least two years certified accounts
And for contractors, you will need evidence of future contracts.
Employ the Help of a Mortgage Broker
You could research and reach a lender directly, but it is advisable to use a mortgage broker. This is because they know the industry’s ins and outs and can advise you properly. Besides that, they also have enough information and network to get you the best deals.
Apply and Receive Your Order
After finding a property and getting an offer from the seller, you can apply for a mortgage. The lender will conduct a valuation of the property to determine its worth. The lender may also require additional paperwork or have other queries.
You get your mortgage offer when the lender is satisfied with your application. It typically lasts for 4 to 6 weeks. The lender will transfer the funds to the seller if the purchase is closed within that period. If it isn’t and the offer is not extendable, you’d have to redo the application process.
Always seek advice from an accredited Financial Conduct Authority registered business.
