Being Mortgage Ready

[Saoirse7]

My husband and I hope to apply for a mortgage in the new year. Thankfully we haven't been hit too badly by Covid.

We want to spend the next couple of months to get 'mortgage ready'.

We are decent enough savers and don't spend too much, especially in recent times as there is no where to go. Any tips on the following would be much appreciated:

-Will you be accepted for a mortgage with any debt? ( Not massive amounts - around a couple of grand remaining from a loan for a car)

• Do they look disapprovingly at frivolous spending? E.g. Netflix, the odd taje away coffee etc (Some horror stories online)

• We pay rent currently that is probably more than our mortgage repayments will be.

Any tips or reasons a mortgage has been turned down would be much appreciated.

Thanks!

I work as a mortgage broker and in answer to your questions yes you can be accepted for a mortgage with some debt as long as the monthly payments are affordable now and based on the stressed repayment that they look at if interest rates increase.

All household expenditure will be looked at but not necessarily negatively unless it's beyond your means. Everyone has spending that adds to quality of life rather than necessities.

The rent payment itself won't be taken into account but as long as you are managing everything as you are then that is always a good thing.

Only other thing I would say is just to be aware that there a lot of changes going on with mortgages in general at the moment due to changing covid rules and restrictions and lenders changing their criteria in response to this so things may not be as straightforward as they were maybe a year ago. That is not said to put you off just that its an ever changing world.

Never been asked about minor spending. Having debt isn't a problem. You can have quite a lot (10s of 1000s) but it's relative to your income.

Definitely make sure no accidental missed payments for anything.

Pull your credit report now to check for mistakes

Thanks Pegase.

How damaging can missed payments be? My husband didn't realise he was having 'lack of funds' standing order payments from one of his own accounts to another (for savings but the 'from' account' isn't in use anymore). He moved out of his home house and forgot to change address, came back to visit with a few of these 😓

So in effect not a missed payment to anyone but insufficient funds to transfer from one of his own accounts to another.

His credit score doesn't seem to have reflected it as it is still good but maybe it shows up elsewhere?

Sorry Mactaylorssecretwife, I am just seeing your reply.

Thank you for your advice! Very helpful. We are going for a Self Build Mortgage - probably more awkward. 🙈

I had hoped maybe mortgages might be easier to get to keep the market going in a way. Such a minefield!

Missed payments would be on lines of credit e.g. car payments, credit card, mobile phone etc. If you get your credit report each line of credit you have will have ticks next to each month to show it was paid on time.

Thank You Pegase. Going to look up the Experian credit report here now

Don't worry about takeaways, netflix etc. If you can currently afford them they won't look twice at them.
Loans also aren't a bad thing but they will be factored in to your affordability so if you can get rid it's sometimes worth it. E.g. I had a post grad loan payment going out that knocked about £16k off affordability but the remaining loan was only 1.5k so it was better for me to get rid.
They look at your credit file so anything bad on there such as a missed payment that you can see they can see it too.

You can download a copy of your free credit report with the main three agencies. Please ignore your credit score, its an arbitrary number that nobody but you can actually see. Its a way of quantifying your history, but it isn't an accurate reflection of anything important. Lenders see your credit HISTORY, not score, and measure you against their own lending criteria.

Transunion, Experian and Equifax are the ones to look at.

@Mactaylorssecretwife I've sent you a PM with a similar question - I hope you don't mind.

We were approved a self build mortgage in Aug, should be getting the first drawdown this week.

To answer some of your questions:

• me and dp both have open loans without 4k left to pay each.

• I was embarrassed handing in my bank statements as I am an impulse buyer but it wasnt questioned. I guess because I am living within my means.

• we were asked to provide proof of rent payment.

• I had late payments on my loan 4 years ago. They just asked if there was a reason for it so they could note it. It was because I moved jobs and was waiting for new wage to be paid.

• dp had a loan written off in 2012 (due to the recession) which they found out about. Luckily he was on good terms with that lender and commenced paying even after it was written off, and the mortgage provider were happy just to have a letter explaining the circumstances.

Good luck.