Seven Things To Do Before Applying For A Mortgage

The word ‘mortgage’ is quite an intimidating one, even scary for some people. It signifies the positive of having the independence of your own home, but also the borrowing of money and debt. Having a mortgage is the only way most of us can afford to invest in property. And it’s a long-term debt that people will be paying off for most of their lives.

I got my first mortgage in 2012 when I bought my shared ownership property. Then me and Luke got our joint mortgage in 2020. We’ll be in our early to mid ’60s when our current mortgage is paid off, so a long time.  So I’ve been through the mortgage application process twice now.

The application can differ between shared ownership and full ownership, plus solo vs joint. But there are plenty of similarities.  Here are some things you need to do before applying for a mortgage.

Spend some time researching and learning

It’s so important to spend some time learning about mortgages, and finances before you jump into getting one. There’s so much I didn’t know before I got my first mortgage, but thankfully I had a financial advisor to help.

Read some articles, watch some videos and absorb content that is out there. The internet is a vast resource and can help educate you far quicker than it would have been for past generations.

Make sure you look into a mortgage calculator to really understand the costs and what you’ll be paying. This calculator allows you to input the property value, your deposit, the loan amount you’re borrowing and interest rates. You’ll also be able to add in things such as the cost of home insurance, and how many years your loan is over. By doing this you’ll get an idea of your monthly rates and how much interest you’ll be paying.

Check your electoral roll

Your electoral roll is the address you’re set up to vote from and acts as proof of where you are living. If this address doesn’t match your actual address then it can cause no end of problems when you try to get credit.

Take a look at a credit score app and see where it thinks you live. If you’ve moved around a lot, or have moved pretty recently you might find that your address is incorrect. So now is the time to get this put right.

When I moved out of my flat I changed my address back to my parents as we were living there for a year. But it turns out that it was never updated so when I went to get a new phone contract it was declined. And my application to open a Metrobank account was also declined. At the time I had no idea my electoral roll address wasn’t up to date. And these declined applications actually damaged my credit score.

Before applying for a mortgage check your credit score

Following on from your electoral roll address, it’s a good idea to check your credit score.

When you apply for a mortgage lenders will be looking to check that you’re someone who can be trusted. They want to know you will pay back your monthly payments. So if your score is low as you have a lot of debt, or have missed previous payments then it can work at a disadvantage.

There are some relatively easy things you can do to improve your credit score such as closing old accounts and using credit little but often.

Pay off as much credit as you can

Mortgage providers will look at all of the debt you have and will be paying back (student loans aren’t counted). They do this to ensure that you’ll also be able to afford to pay back a mortgage.

If you have small amounts of finance on store cards, credit cards or buy now pay later schemes pay them off before your mortgage application. This will help lower your money owed, but also show that you are good at paying back your debts.

If there are any debts you can’t pay off before your mortgage application have this information handy. Make sure you can explain what the debt is, how much you pay and when it’s due to finish being paid for.

Before applying for a mortgage check all addresses

Following on from your electoral roll it’s important to check that your address matches everywhere else.

This includes all utilities and bills, all bank accounts, and your driving license. You will need to give various proof of address when you apply for a mortgage so make sure they match where you actually live. You will also need to show bank statements, and it’s easy to forget to update these when you may not get physical bills.

If you need to update your driver’s license address it’s free to do and the DVLA will send you a new license.

Stop applying for credit/ new bank accounts etc

Before you apply for a mortgage you want to put yourself in the best position possible. Where possible stop applying for any new credit (or at least limit it). This includes store credit, buy now pay later schemes etc. Try and limit how much you put on your credit card too so you don’t look like you rely on it.

On the flip side if you have never had a credit card or taken out credit then the advice I have is the opposite. Open up a credit card and spend some money on it, paying it back within the interest-free period. Having no credit can be as bad as having low credit because there’s no evidence that you’re good at paying back debt.

Before applying for a mortgage get all your documents ready

When you go into your mortgage meeting you will need quite a lot of documentation so make sure you have printed copies ready. The exact documents you need may differ slightly and your advisor will let you know.

Ones you are likely to need to include:

• Proof of address from a bill in the past three months
• Last three months’ payslips (if you’re employed)
• Latest P60 (if you’re employed)
• The last three year’s tax overviews (if you’re self-employed)
• Documentation of any debt/ loans

It may also be useful to have printouts of your last three months of bank statements to show spending. This can help show any regular payments you may be making in order to check the affordability of a mortgage.

Having all of these documents together before applying for a mortgage will help speed up the process.

Do you have any more tips on things to do before applying for a mortgage?

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