Are you planning to buy a new house or to change the current mortgage? Every year, thousands of mortgage applications get rejected for varying reasons. If you are planning to apply for a mortgage any sooner, make sure to read the following points to increase the probability of your application approval.
All that you owe
Every pound that you owe as personal loan, credit cards or other debts would push your application down. You should pay off all the debts, before you plan to put on a mortgage.
Your bank statement
Many lenders use your bank statement to check on your spending. The bank statement for the last six months would be analyzed to know your spending efficiency. If you have ever exceeded your overdraft limit or overdrawn, it would reduce the attraction of your application. Make sure that the account balance is not decreasing every month. Put a tab on all the spending and make your bank statement look pretty.
Your credit score
Do all that you can to maintain or increase your credit score. Pay all the bills on time and keep your credit card within limit.
Learn what’s new
The mortgage process is not the same as it was a year ago. Make sure to learn about how the application is being analyzed. The FCA has come up with new rules known as the Mortgage Marker Review. This ruse would make sure that the individual has borrowed money that he will be able to afford now and in future.
Use affordability calculators
There are a lot of online mortgage affordability calculators that would help to get a gist of how much money you would be able to borrow. The output of such a calculator is just an overview and it need not be the same in reality. This calculator would also help you to choose the right lender. If your application gets rejected by a lender, it would further damage your credit score. Thus, it is better to choose the right lender before you plan to apply for a mortgage.
The lenders now want to know how much the borrowers are spending on their child’s education, travel cost and even on groceries. They might also ask about the future plans which would affect the loan paying capacity. With the interest rate to buy mortgages rising, people want to know whether you would be able to repay the loans. The rate is expected to rise by 1.75 pc during this year and the increase would happen, before the onset of summer.