Common Mistakes to Avoid When Applying for a Mortgage
What You Can Do
Applying for a mortgage is one of the biggest financial decisions you’ll ever make, so it makes sense to do all that you can to make the process as smooth and straightforward as possible. Here is some mortgage advice to help you avoid some very common mistakes, such as not working with a mortgage broker.
Not Working with a Mortgage Broker
One of the biggest mistakes prospective buyers make is not seeking out a mortgage broker. Many assume they can find the best deals themselves, but brokers have access to all UK lenders and the products that they offer – including some you might have missed out on by doing it yourself. A broker will also guide you through the paperwork, ensuring everything is completed correctly and on time, which reduces the risk of delays or rejection.
Failing to Check Your Credit Score
Your credit score plays a huge part in determining what mortgages you will be approved for and the interest rates you’ll be offered. Many applicants fail to review their credit report before applying, and then only find errors or unresolved issues that hurt their chances when they are rejected. So, before starting the application process, check your credit report! If there are discrepancies or debts, resolve them as soon as possible to improve your credit score.
Overlooking Hidden Costs
Many first-time buyers focus solely on saving for a deposit without considering the other costs involved in purchasing a property. However, things like stamp duty, solicitor fees, valuation fees, and moving expenses can all add up. Failing to account for these expenses can leave you financially stretched when you just weren’t expecting to be. A mortgage broker will be able to talk you through all the costs of moving, helping you to prepare and set aside the funds you need.
Changing Jobs or Income Sources Before Completion
Lenders scrutinise your financial stability during the application process and doing something like becoming self-employed or significantly altering your income sources while applying can be seen as red flags. So, if possible, wait until after your mortgage application is approved and the purchase is completed before making major career moves. Stability is key if you are trying to prove that you can repay the loan.
Applying for New Credit
Taking out new credit, such as loans, credit cards, or car finance, during the mortgage application process can have an impact on your chances of approval. Lenders check your debt-to-income ratio, and additional credit can make you look like you are taking on more than you will be able to pay off. Even if you’re approved, taking on new credit can affect the interest rate you’re offered! So, avoid making any major financial commitments until your mortgage process is complete.
Not Getting Pre-Approved
House-hunting without getting pre-approved for a mortgage is another common mistake. Pre-approval, otherwise known as having an agreement in principle, gives you a clear understanding of how much you can borrow, helping you narrow down your property search effectively. It also shows sellers that you’re a serious buyer. Failing to get pre-approved can lead to disappointment if you find your dream home but can’t secure a mortgage in time or realise you can’t afford it. Estate Agents are more likely to put your offer forward with a decision in principle, it could put your offer ahead of someone who doesn’t have one.
What Next?
Applying for a mortgage doesn’t have to be overwhelming if you avoid these common mistakes. Working with a mortgage broker can really help. So why not get started today?
