Mortgage Application

[Newbie1999]

We’ll be seeing a mortgage advisor in a few months time once our deposit is nearly saved, but I wondered if anyone has any advice on getting finances sorted to get the best chance of mortgage approval? For example is is best that my credit card balance is fully paid off etc? I transfer shopping money on to a Monzo every month - is it best to leave this is my main account? Am I massively reading too much into this and overcomplicating?! Thanks.

Martin Lewis has a whole section and downloadable info on mortgage applications, great advice on there.

Will take a look, thanks!

Pay of any outstanding debts, makes sure you're not living in overdraft and you'll be fine.
Good luck :)

Stay out of your overdraft and avoid defaulting on anything. Paying off debts helps if you want to borrow more, but it's not entirely essential, however it depends on which lender you use as to how they calculate affordability. I agree that it's a good bet to pay off as much debt was humanly possible, but don't be 'put off' if you can't. We had a car loan of £7000 when we got our FTB mortgage and still managed to borrow what we needed. Be prepared that it will have an impact on what you can borrow though.

Oh and good luck!

Thanks!

I have about £1.5k on a CC which I plan to pay off, but good to know it’s not entirely necessary.

If it helps, my friend has just secured a mortgage with 2k on a credit card, but it depends on your personal circumstances and how much of the outstanding debt represents your annual income , and what other outgoing you have such as childcare bills. With a good credit rating and deposit, I'm sure you'll be fine. Everyone I know has used a broker as opposed to going directly to a financial institution. Might be worth considering if you haven't already.

We have just got our first mortgage. We have a car loan and a car on lease plus 3k on a credit card. Was no issue although we aren’t borrowing to the max, it might have made a difference if we wanted to borrow more.

By the time we apply I’ll prob have 1k left on it (this is my only debt) but I’ll pay this off if it means we can borrow more. I just need to be careful with my overdraft (sometimes go into it without realising) - would this kind of thing only be looked at for prior 3-6 months? I don’t think it shows on credit file does it?

I had about 7k on credit cards, single mum and got 67k mortgage to buy my house (Inheritance paid deposit) so I don't think 1-1.5k on one would hurt, it will reduce by a small amount what you can borrow though.

As above, ensure you are not living in your overdraft, don't default, don't apply for catalogues etc whilst waiting for mortgage and you should be fine.

Thanks all for the replies.

Did you need a mortgage in principal when viewing houses (I’ve heard this is now often needed)? Also, do you obtain this yourself and then go to a broker when applying for the actual mortgage?

I didn't have to declare anything about my mortgage to view places. I had done a calculator with my bank and new a rough ball park and then I paid for a broker to do the rest. I didn't want a free broker as when my exh remortgaged they put massive pressure on for insurances etc and actually only had a very limited number of providers. By paying for one (one fee covers me for life) I got access to the full market and no hard sell on added extras. Well worth the £350 fee

I needed a mortgage in principal. I think it differs between estate agents, but you can get one from anyone. It's not really worth anything. It's not a 'promise' of a mortgage from a lender. It just confirms the maximum that a lender is likely to loan you. It gives an estate agent an assurance that you are not wasting their time, but as the above poster said, not all estate agents are bothered about it.

I got a mortgage in principal from a high street bank, but it wasn't high enough for the house O wanted, so I went to a broker and got another one.

Thanks, appreciate the replies!

Close down any credit cards you don't use, I have lots that I don't use but had at one point for 0% offers for big purchases, etc. I was told to close them as they could affect mortgage offer (lots of credit already open to me although not used).

Oh really, I thought it was best to not use them but keep them open, to show that you’re not using available credit?

My mortgage advisor told me not to have too many, as if you have a lot of credit available to you and could use it quickly, leaving you unable to afford the mortgage on top.
I think there are pros and cons to it- if you don't use them it shows you are not desperate for credit, but then if you become desperate for credit you have £10,000's available to you in an instant which would be considered high risk.

Recent mortgage. Had 14k of unsecured debt. £10k car loan and 4K on cc.

Bank reduced the amount I could borrow by 30k but if I paid off the £10k then they'd let me borrow the extra. So I paid off the loan. Only saved about £720 interest so wasn't much point in terms of saving. But the new house needs lots of work and that £30k will make a huge difference

Agreement in principle is useful as the estate agents/sellers know you are serious buyers, it also helps you not to look at houses that would be out of your reach.
Don’t rely on online calculators, get a personalised quote.

I also had £14k unsecured debit (actually what was left from my debt management plan!) and £4K on a c c. Plus a fair fee defaults.
Perhaps I caught them on a good day, but they still gave me a mortgage. Oh and I had only been in my job a month!