Congratulations! You’ve got your deposit ready and you’ve found the home of your dreams. The next important item on your list is your first time buyer mortgage. Before you apply, however, there are a few steps we recommend you take to give yourself the greatest chance of success at this key stage of the buying process.
1. Check your credit score
It’s important to make sure that credit agencies don’t hold any wrong information about your financial history, as this could hinder your application. Order credit reports from each of the main companies, and investigate any errors.
It’s also a good idea to pay off (or at least reduce) any credit card debt before applying for a mortgage. You need to prove to the lender that you’re low risk, and high levels of debt can trigger alarm bells.
2. Do the maths
Ahead of applying for your mortgage, be certain you can afford it. The bigger your deposit is, the faster you’ll be able to pay back your debt, but you might not be able to put all your savings into the mortgage right away. There are other costs aside from the price of the property to factor in, including stamp duty, conveyancing fees and purchasing new furniture.
You should look at how much your mortgage will cost each month and make sure there’s a bit of wiggle room. Ask yourself whether you’d be able to cope if interest rates rise, or if you were to find yourself between jobs.
3. Get your paperwork together
Your lender will want to see evidence that you can afford your mortgage, so gather all the key documents to take to your meeting. You’re likely to need the following:
● A P60 form (which shows your annual income and how much tax you pay).
● Three most recent payslips and bank statements (so the lender can see your monthly income and outgoings).
● Recent utility bills (again to check your outgoings and that you’re able to manage them).
If you’re self-employed, the lender will want to see three years of accounts and a completed SA302 tax form.
