Are you considering buying a house in 2024? If so, you’re in the right place. In this blog post, we’ll guide you through essential steps to take 3-6 months before applying for a mortgage, ensuring a smooth and successful home-buying journey. Whether you’re looking at properties in Coventry, Leamington Spa, Warwick, Kenilworth, or Stratford upon Avon, this guide is tailored just for you.
Reduce Your Debt to Boost Affordability
Reducing your debt, if it is possible to, will not only improve your affordability but also reduce the risk of lenders declining your application based on debt-to-income ratios.
Maintain a Buffer in Your Account
Lenders appreciate good money management. Ensure your bank account doesn’t hit zero, as some lenders prefer to see a financial buffer. This practice signals responsible financial behaviour and increases your chances of a successful mortgage application.
Clear Your Overdraft
Living in your overdraft can be a red flag for some lenders. In the three to six months leading up to your mortgage application, try not to use your overdraft. Clearing it demonstrates financial stability and responsible money management. It is very important not to exceed your overdraft as this is using money that really isn’t yours.
Steer Clear of Excessive Betting
While the occasional small bet might not raise eyebrows, substantial betting can be viewed as a financial commitment by lenders. Some lenders will average the amount you have spent on betting over the past 3 months and put that amount as a commitment, which may vastly reduce the amount you can borrow. Some lenders will simply decline the application as betting can be an addiction and there is no guarantee how far it will snowball. Keep your betting activities to a minimum, especially in the months leading up to your mortgage application.
Gather Necessary Documents
Be proactive in collecting the required documentation. Your bank or mortgage broker will need items such as payslips, bank statements, proof of ID, and evidence of your deposit. Ensure your ID is up to date, and your driving license reflects your current address to avoid any potential delays.
Avoid Major Financial Changes
Lastly, steer clear of significant financial changes in the months before applying for your mortgage. Avoid hard credit searches, such as applying for new credit cards, loans, phone contracts, or car finance. These activities can negatively impact your credit score, potentially affecting the success of your mortgage application. Avoid changing jobs too, if possible.
By following these tips, you’ll enhance your mortgage readiness, determining a smooth home-buying process in Coventry, Leamington Spa, Warwick, Kenilworth, Stratford upon Avon or the rest of Warwickshire.