The recent lockdown measures have forced many to put their mortgage plans on hold. Estate agents have closed their doors temporarily, on-site valuations have been suspended and many mortgage products have been pulled from the market.
But there’s light at the end of the tunnel. Lenders are beginning to expand their criteria and policies around automated valuations, and as such, there are still purchase options available. And even if your plans have been stalled in the short term, there are steps you can take to ensure that your application progresses smoothly when the lockdown measures are lifted.
Here are eight ways to prepare for your mortgage application while housebound.
1. Check your credit reports
UK mortgage lenders mainly use four credit reference agencies to check a customer’s credit profile: Equifax, Experian, TransUnion and Crediva. Your credit files at each of these bureaus might have subtle differences between them and not all lenders use all four when cross-checking information.
It's a good idea to download and read through your credit files with all of these agencies. Familiarising yourself with the contents of your reports will give you forewarning of any issues that might come to light during the lender’s checks and give you a chance to address them.
Always go through your reports with a fine-tooth comb. There could be inaccuracies or outdated information in there, and you should challenge these discrepancies before applying for your mortgage.
You can download your multi-agency credit report from the link on THIS PAGE – it’s a free 30 day trial so just remember to log in and cancel it within the 30 days to avoid getting charged!
2. Optimise your credit file
You’ll want to make sure your credit file is in the best possible shape before applying for your mortgage, and there are steps you can take to improve it while on lockdown.
After checking your reports are up to date, consider clearing any debts you’re in a position to pay off. If you have multiple debts outstanding, consolidating them could be an option, but be sure to seek financial advice from a professional before you press ahead with this.
If you have little or no borrowing history, this could go against you as the lender will have nothing to go on when trying to determine your past financial conduct. There’s a quick fix, though: consider an adverse-specific credit card. Spend on it each month and make your payments on time and in full.
Finally, make sure your financial conduct is good during these lockdown months. Make any debt and bill payments on time and live within your means.
3. Make sure you’re registered to vote
Mortgage lenders prefer borrowers who are listed on the electoral register as it makes it much easier for them to track your financial history. If this is one of those things you’ve been constantly putting off, lockdown presents the perfect opportunity to tick it off your to-do list.
Consult the government’s website for information on joining the electoral register.
4. Avoid multiple credit searches
If you’re applying for finance of any kind during the coming months, be sure to check whether the finance provider carries out a ‘hard’ or ‘soft’ credit check to determine whether you qualify. Having too many ‘hard’ footprints in a short space of time (6-12 months) is a red flag for some lenders.
This can have a negative impact on your credit score, and while not all lenders consider credit scores to be the be-all and end-all, too many applications for finance in this relatively short timeframe might be interpreted as an indication that you aren’t borrowing responsibly.
This rule applies to mortgage applications as well, so bear this in mind when lockdown lifts and it’s time to approach potential lenders. Finding the right one first time is the key to keeping hard footprints to a minimum, and this is something a mortgage broker can help you with.
5. Prepare your documents
There are documents you will need to present for your mortgage application and getting them ready in advance could save you precious time when the ball starts rolling.
Most lenders will need to see the following…
· Proof of ID (passport, driving licence etc)
· Proof of address (utility bills, council tax statement etc - dated within the last three months)
· Proof of earnings (covering the last three months and your P60)
· Two-to-three years’ worth of accounts (self-employed only)
· Three months’ worth of bank statements
· Proof of deposit (savings statement, gifted deposit letter etc)
· Credit reports (see section #1 for full information)
· Information about the property you’re buying (address, construction material, etc)
6. Research property prices in your chosen area
Now would be a good time to double-check that the property you’re buying is worth the price you’re offering. Formal valuations are currently at a standstill as the coronavirus measures have made on-site visits difficult, but you can get a rough idea about what the property is worth online.
Online property portals such as Zoopla and Rightmove can show you what similar homes in the same area are selling for, while entering the property’s address on Mouseprice will reveal any previous valuations and what it has sold for in the past, based on Land Registry data.
7. Add to your deposit
If you’re able to work from home and your income is unaffected by the coronavirus epidemic, now is the perfect time to add extra funds to your deposit. Let’s face it, what can you actually spend your disposable income on while much of the country is the lockdown (except maybe wine..)?
While you might think you’re done saving after cobbling together enough to meet the lender’s minimum deposit requirements (usually 5 -15% of the property’s value), keep in mind that putting down extra could mean ending up with a lower interest rate, or even be the difference between approval and refusal if the deal carries any risk to the lender due to factors such as bad credit.
8. Speak to a mortgage broker
Applying for your mortgage through a whole-of-market mortgage broker will help you make sure you end up with the best deal that you qualify for. Although your mortgage application might be a few months away, there’s no reason to delay contacting a broker as they can help you prep.
A good independent mortgage broker will have bespoke advice for you ahead of your application. They can help you with your initial paperwork, run through your credit reports with you and keep you updated about the market conditions throughout the coronavirus crisis.
When the market returns to normal, your broker will find you the most suitable deal available, walk you through the full application process and negotiate the best rates with the lender. Make an enquiry now for a free, no-obligation chat today.