So, you’ve started to look at properties and mortgages.
You’ve probably read loads of articles telling you what to do before applying for a mortgage, but what about what not to do? In this blog, we’ll go through 7 things you should avoid doing in the lead up to your mortgage application.
Here’s what not to do before applying for a mortgage!
Failing to check your credit score
Your credit score plays a big part in your mortgage application, so it’s important to know where you stand. Checking your credit score early in the process will mean that you could have enough time to adequately boost your score if necessary, which could have a big impact on the success of your application. You can find out more about how to boost your credit score in our blog, and you can check your credit score on CheckMyFile by using a free trial.
Getting into debt
This one is fairly self-explanatory. A lender will want to know if they can trust you to repay your mortgage loan, so they will look into your financial history to check your incomings and outgoings, making sure that you would be able to pay your mortgage off each month without any stress. If a lender sees that you have recently taken on extra debt to pay back, then they could regard you as a risky borrower which would hurt your chances of getting a mortgage.
Making a huge purchase, e.g., New Car on a loan or a holiday purchase on a credit card
A lender will look at affordability and a large outgoing or more debt to service means that potentially your affordability will be lower as you’ve now got a large monthly commitment.
Changing jobs/ going self-employed
We can usually find a lender for every situation but changing your job could restrict you to fitting with fewer lenders. Sometimes you just can’t help it, but if you can, avoid switching jobs before/during the mortgage application as it could limit you to only dealing with lenders that allow that. Should you choose to become self-employed when applying for a mortgage this is much more of a problem. You’re no longer employed so you can’t use that income even if it was only from last month, as you no longer work there. When self-employed, most lenders will require proof of income averaged over the last 2 years (there is a handful that will allow just a year) to show steady income, so not being able to give lenders what they need to prove your income may result in you having to wait a couple of years! Talk to your broker to understand your options.
Making large deposits
Getting a deposit for your first home is hard, we get it. Your family members may want to help you out and gift you some money towards your deposit to assist you on moving out of their house! Be careful as there are rules about what constitutes a family member and it’ll need to be carefully and properly documented, but don’t worry, we have templates for this scenario.
If you are hoping for help from family members, the lender and solicitor will need to be able to trace that money so using Nan’s cash from behind the sofa could be problematic!
Not making payments on time
As we have said before, the lender wants to know that you are responsible with money and that you are capable of paying back your mortgage each month. If a lender sees that you have multiple missed payments, whether it’s a rent payment or a phone contract, they will assume that you won’t be able to pay a much larger mortgage back on time and you’ll have a hard time being accepted.
Undesirable items on Bank Statements
We’ll break these down into 3 main areas
This could have a big effect on your mortgage application, some lenders can be very strict with gambling and could be wary about applicants with a history of gambling, which could lead to your application being unsuccessful. The odd bet here and there shouldn’t harm your mortgage chances, but if you are spending large chunks of your income on gambling then it could be more difficult for you to find a better deal. Not all lenders will be super strict on gambling, however, and they will take certain things into account, such as how often you’re gambling and how much you’re gambling.
Rise in popularity of Fan Sites
We’ve started to see statements that show a large volume of transactions to fan sites such as OnlyFans! These subscriptions can be put in the same category as gambling, due to the amount of money coming out and, depending on the frequency of the transactions, it could put your mortgage application at risk!
Comical Sexual References
We’ve seen some absolute crackers on bank statements, but underwriters and banking professionals can be deemed as slightly more strait-laced. It’s all fun and games until you have to write a letter explaining how your mortgage as it stands isn’t quite affordable due to your “Monthly Fellatio Training”, but you would give this up should expenses become tight for you and to ask the underwriter to please exclude from affordability. We’ve seen this scenario before, and the clients were a tad red-faced about the whole thing
To wrap It up
If you have done a few of these things, then you don’t need to panic, but it is a good idea to speak to us here at Mortgage Monster to see how it may affect your mortgage application and how we can help to resolve any difficulties.
If you are in need of any help, give us a call! - 01702 864848