Becoming 'mortgage-ready'

At this time of year, many of us are planning major life changes – and for some of us this means becoming a home owner. But how can you give yourself the best chance of passing a lender’s affordability test? Lenders use the test to assess your financial management skills and to reassure themselves that you can be trusted to pay back the mortgage.

So what can you do to make yourself mortgage-ready?

  1. Pay off loans: try and pay off any existing loans you have, or at least ensure that you make regular payments on time
  2. Maintain stable employment: Lenders will ask for a few months’ payslips. Having steady employment reassures lenders that you will have a regular monthly income and be able to afford the mortgage
  3. Cut back: Take the time to assess your outgoings. Are there any areas where you could economise? For example, cancel unused memberships and subscriptions; reduce your food bill by shopping in cheaper supermarkets and cutting down on takeaways
  4. Save regularly: Being able to prove that you save regularly reassures lenders that you have excess monthly income that could be used to pay off a mortgage
  5. Do your own affordability test: Carefully consider how you will pay the additional costs involved in buying a house such as the deposit, stamp duty and legal fees. Use mortgage comparison sites to get an idea of what your monthly repayments will be, and contact a broker to get specialist assistance in finding the right deal for you. According to money saving expert Martin Lewis, You can, and often should, use a broker to help find the right deal. They’ve info unavailable to consumers, e.g., lenders’ credit and affordability criteria. A good broker can ease acceptance by matching you to the right deal – and the application process is quicker.’ Source: Manchester Evening News

How long do I need to prepare myself to be mortgage-ready?

Ideally, a minimum of six months. Being able to demonstrate at least six months of regular employment and careful financial management will put you in a stronger position to pass the affordability test.

mortgage application approved