Should I get pre-approved for a Mortgage?
Should I get pre-approved for a Mortgage? Samantha Bickford Managing Director of The Mortgage Girl explains the Do’s and Don’t’s of applying for a mortgage.
Heres some Mortgage pre-approval tips (the dos);
The mortgage pre-approval process is very important. Read and follow these tips to understand how to put yourself in the best position to be accepted for a mortgage.
1. Contact an FCA Registered Mortgage Broker First.
Many First Time Buyers think the first step in the home-buying process is to contact an Estate Agent and then start looking at homes.
The first thing you should do is meet with a Mortgage Broker to discuss your circumstances and objectives. After all, if you find a home you like, you’ll likely want to get the process started quickly.
Being assessed by a Mortgage Broker initially, and then applying for a Decision in Principle (pre-approval) from the mortgage lender ensures you are putting yourself in the best possible position to obtain a mortgage for your dream home.
Being pre-approved also helps you know how much you can afford to spend. You can get a good estimate of how much you can afford with an assessment of your circumstances with a mortgage broker, however, the final limit will always be how much the Mortgage Lender will approve you for following their underwriting process.
How long does it take to get a mortgage pre-approval? It can be done within an hour if you have your documentation together. Contact us to get started.
2. Assemble your documentation
Collecting the documentation needed for a mortgage application can take time – it’s best to get started early. Ask your mortgage broker what documents are required to apply for your mortgage, and start gathering it all in one place.
Here’s a typical list to get you started:
• Identification – to prove you are who you claim to be.
• Bank account and savings statements – to prove you can pay your monthly payments and have the deposit available.
• Proof of income – The latest three months payslips or the last three years self-assessment accounts if self-employed.
• Your full credit report. Lenders have access to databases of this information, and full disclosure of any issues up front will help your application. Be sure to inform your mortgage broker in advance.
Mortgage pre-approval mistakes (the don’ts)
Here are three rules that will help you achieve a successful Decision in Principle.
1. Hold off on major purchases
Once you’ve submitted your documentation to your broker, your financial situation shouldn’t change from DIP to loan completion. Changes to your financial situation could ultimately result in the mortgage rejection, even if you were initially accepted. To avoid any issues, don’t make any major purchases that change your debt to income ratio.
2. Don’t apply for new credit
You also should not apply for new forms of credit, like a personal loan or credit card. Your debt level and available credit are both factors in mortgage approval, so increasing them may risk your mortgage application.
4. Do not quit or change jobs
Finally, avoid changes to your employment status close to the time of your mortgage application. Steady and predictable income is crucial to most mortgage applications. Changing jobs or becoming self-employed will certainly cause issues for the mortgage approval process.
If the worst should happen, and you are made redundant, it’s probably a good idea to delay buying a home until you regain financial stability.
The bottom line: As with many things in life, planning makes all the difference. Take the time to get your finances in order before you meet with your Mortgage Broker and apply for a Decision in Principle.
So I hope this has helped you answer your question: Should I get pre-approved for a Mortgage?
Please contact us to find out more details about The Mortgage Girl services. We are delighted to provide you with initial, free advice tailored to your individual circumstances.
Looking for more great mortgage news, tips & advice? Check out our last blog post: What does a mortgage broker do?