Getting a mortgage means getting a lender to say “YES”. Getting to “YES” is largely a matter of being prepared, and most people don’t know the simple things they can do to prepare for their mortgage application.
Here are 5 simple tips to help you prepare for that mortgage application, if you do these things it will be a lot easier for your mortgage adviser to get you the loan you need and the best deal.
Tip 1.) Simplify your bank accounts. Keep the bank accounts you need and close those accounts you neither need nor use. Most people can get by with two accounts; a current account where they receive their wages and spend for their daily purchases, and a savings account to hold any spare cash which means they earn some interest. The same with accounts at multiple banks, if you have an account at a bank you never go near, why keep it going?
Tip 2.) Clear any bank overdraft allowances if you don’t need them or don’t use them, cancel the overdraft facility or close the account. As with credit cards (Tip 3.) the fact of having an OD works against you when it comes to loan affordability, even if you never use it.
Tip 3.) Close all credit cards you don’t need and reduce the credit limits on cards you do use. If you have credit cards (Visa, MasterCard, Q-cards, GEM cards, etc.) then you will be marked-down when the bank’s calculate if you can afford a loan; this is true even if you have no balance to pay and don’t use the cards. Your ability to repay loans is marked back according to how much credit you have available as a credit limit, not on how much credit you actually use.
Tip 4.) Get rid of any small amounts of debt, the fewer debts you have the better. If you have a traffic infringement that you are paying through salary deduction, get rid of it now because seeing ‘Court Fines’ written in your payslip deductions is not a good look. If you have a small balance on a shop card (GEM cards, Farmer’s cards, etc.) then pay them out and close the account. It does you no good to be seen as a habitual user of unsecured debt.
Tip 5.) Don’t guarantee other people’s debts, these debts maybe called-up at any time and you will be required to repay the debt at short notice, usually at the worst time (Murphy’s Law). If you have guaranteed a debt, get out of it if at all possible. Outstanding debt guarantees leave you very vulnerable financially and do not help you when the banks assess your credit worthiness.
Everyone has their own unique life and financial circumstances. If you are thinking of getting a mortgage and would like to discuss your own options, give us a call. Our advice is free, we will work with you to get that mortgage pre-approved or that house purchase completed. Simple things can make a huge difference when it comes to getting the bank to say “YES”.