Many people may have new goals for 2023 – buying a property for the first time, moving to a bigger property to support their growing family, buying an investment property on a Buy To Let basis or arranging a remortgage to a new deal & maybe capital raising for some well needed home improvements.
In 2022 interest rates did increase more than previously expected in a short space of time, However, property sales are still taking place and there are many mortgage products on the market. We’ll guide you through how to get mortgage ready in 2023, what matters when applying, and how you can enhance your mortgage application.
Your Credit File is Essential in Obtaining the Best Mortgage
When you apply for a mortgage, lenders will review your credit file as part of the application process. Your credit file contains information about your credit history, including details of any credit accounts you have had, any missed payments or defaults, and any county court judgements against you. This information helps lenders to assess your creditworthiness and determine whether you are a reasonable risk for a mortgage.
There are a few reasons why credit files are essential when applying for a mortgage in the UK:
- Credit history: Lenders use your credit file to understand your credit history and see how you have previously managed credit. If you have a good credit history, with a high credit score and a history of making timely payments, this will generally be seen as a positive by lenders and may increase your chances of getting a mortgage. On the other hand, having a poor credit history, with a low credit score and a history of missed payments or defaults or county court judgement (CCJ’s), may make it more difficult for you to get a mortgage from high street lenders, however there are more specialist lenders available through mortgage brokers that provide bad credit mortgages, who could help.
- Credit score: Your credit score is a number that represents your creditworthiness and is calculated based on the information in your credit file. Lenders use your credit score to help them decide whether to lend to you and at what interest rate. If you have a high credit score, this may make it easier for you to get a mortgage and may also result in a lower interest rate, however if you have a low credit score there are specialist bad credit lenders that can help.
- Affordability: Lenders will also use your credit file to help assess your affordability based upon the credit commitments you have alongside all other outgoings such as food, utility bills, insurances, memberships, travel costs etc. If you have many financial obligations or a high level of spending, it may be more difficult for you to get a mortgage.
Overall, credit files are an essential factor that lenders consider when deciding whether to grant a mortgage. It is, therefore, vital to get a copy of your credit report from the start from a company such as CheckMyFile, Experian or Equifax.
Arranging your Documents Before you Apply for a Mortgage Helps
When applying for a mortgage or remortgage, you will typically need to provide a range of documents to your broker &/or lender to support your application. Here is a comprehensive checklist of the documents that you may need to provide:
- Proof of identity: This could include a passport or driving license.
- Proof of address: This could include a utility bill, council tax bill, or bank statement showing your current address.
- Proof of income: If you are employed this could include payslips & P60. If you are self employed this could be your tax calculations & tax overviews &/or Accounts.
- Bank statements: You will usually need to provide several months’ worth of bank statements to show your income, expenditure, and savings.
- Details of any outstanding debts: This could include credit card balances, car loans, or student loans. You will need to provide details of the creditor, the balance due, and the monthly payments. A lot of this information will be shown within your credit file.
- Details of any current or previous mortgages: If you have an existing mortgage you will need to provide details of the lender, the term of the mortgage, current rate plus the outstanding balance. A lot of this information will be shown within your credit file.
- Evidence of a deposit: If you put down a deposit on the property, you will need to provide proof of where the money is coming from, such as a savings account statement or a gift letter from a family member.
- Other documents: There maybe additional documents you need to provide, such as a lender direct debit form & application declaration – however providing these initial documents is a good start.
It is crucial to gather all the necessary documents before starting the mortgage application process, as this will help ensure that your application is processed smoothly and efficiently.
Speaking with a Mortgage Broker is a Vital Step in Arranging a Mortgage
There are several reasons why it can be helpful to speak with a mortgage broker early on in the mortgage application process:
- Expert advice: Mortgage brokers are experts in the field of mortgage lending and provide valuable advice and guidance on the mortgage process. They can help you to understand the different types of mortgages available, explain the terms and conditions, and provide recommendations based on your circumstances.
- Access to a wide range of lenders: Mortgage brokers have relationships with many lenders, including banks, building societies, and specialist mortgage providers. This means they can help you access a range of mortgage products that may not be available to you if you go directly to a lender.
- Comparison shopping: A mortgage broker can help you compare different mortgage products and find the most suitable for your needs. They can provide quotes from multiple lenders and help you understand the differences between the products, so you can make an informed decision.
- Streamlined process: Mortgage brokers can help to streamline the mortgage application process by taking care of much of the paperwork and legwork involved. This can save you time and effort and make the process less stressful.
Overall, speaking with a mortgage broker early on in the mortgage application process can be a helpful way to get expert advice, access a wide range of lenders, compare different mortgage products, and streamline the process. This can increase your chances of getting the right mortgage deal possible.
How to Explore Your 2023 Mortgage Options with The Money Hub
If you are looking to arrange a mortgage to buy a home in 2023 or remortgage to get a new deal, help is available.
Call The Moneyhub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Mortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.