Taking out a (new) mortgage is often a major decision. That means it’s worth taking the time to prepare and do thorough research. Ideally, you should start laying the ground for your mortgage application about 6 months before you apply. This should give you enough time to address any issues before they become a problem.
Make sure all your financial paperwork is in order
Double-check that all your service providers have your up-to-date contact details written in the correct format. This is important as it makes sure that credit bureaux will be able to connect all your financial dots.
Check your credit records
Currently, the major lenders in the UK generally use Equifax and Experian. You should therefore definitely check your credit records with both of them. It wouldn’t hurt to check TransUnion too. If you want to be thorough you can also check Crediva although they are a very small player in the UK market.
See if there are any steps you can take to boost your credit score. For example, if you are renting, see if your landlord will report your rental payments to the credit bureau. Even if they won’t, you may be able to self-report. This does, however, require you to pay your rent from a bank account that supports Open Banking.
If you see anything on your credit report that’s not clear to you, follow it up. It could be something you could address to improve your credit record. It could be a mistake. It could also be a sign of fraud. Either way, you want to address the issue quickly.
Make sure that you are on the electoral roll at the address you are going to put on your mortgage application. This should also be the address registered with all your other service providers.
Clean up your transaction history
At least six months before applying for a mortgage, go through your transaction history. Check for anything you could improve going forward. Here are some key points to consider.
Make any major purchases at least 7 months out
If you’re going to make a significant purchase do it at least 7 months before applying for a mortgage. This is particularly important if they’re discretionary purchases.
If you’re using your personal bank account to pay business expenses, then get a credit card for business use instead. You can make the payments from your personal bank account but they will be clearly delineated.
See if you can pay down any debts
Again, try to do this at least 7 months out. This makes it less obvious that you’ve made the extra payments to improve your chances of getting a mortgage.
Cancel as many recurring payments as you can
If you really need or want something and you can afford it then, generally, it’s fine to keep it. The exception is if it’s something that might cause a lender concern. In that case, either cancel it or move it onto a credit card. Lenders are much less likely to check those.
Avoid controversial purchases
Again, if you’re buying something that might give a lender cause for concern move it onto a credit card. If you’re not sure, then move it onto a credit card anyway. For gambling, use an ewallet online and cash in the real world.
Remember deposits can raise red flags too
Mortgage lenders are legally obliged to look out for signs of money laundering. This means that having lots of deposits can raise a red flag, especially if they’re in cash. If you’re using your personal bank account for freelancing then make this clear to your lender and be prepared to back it up.
If people are sending you gifts of money or repaying loans, then make sure they know to use sensible references. Joke references may be fine at other times but not when you’re preparing to apply for a mortgage.
If you require mortgage advice and would like to speak to one of our advisors, please get in touch.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE