Applying for a mortgage at the moment is more like running a marathon than a sprint. In the ‘good old days’ of three or four years ago(!) all you had to do was say “I want to buy this” and tick a few boxes on a form and the money would appear as if by magic before your very eyes. Loan to values were high or non existent in some cases, making the process ridiculously easy. What we have now is the polar opposite. Here are some tips for getting through the mortgage process as it stands right now.
Cheap Interest Rates Are Not The Whole Story
Many banks are trying to con us that cheap interest rates are all that matters. Not so, the mortgages for comparison must be looked at as a whole.What is the cost of the mortgage over the lifetime of the loan? And, are there penalties for changing mid stream- if so they need to be added in, along with any costs in fees etc.Be aware that lenders may seek to lessen the timescale for the borrowing, so make sure you are really comparing like for like when you seek the best deals.
Get All Your Mortgage Documents Ready
If you are self employed then you will need to prepare well in advance. The bank will likely seek the following for the mortgage:
- last two years’ accounts ( self employed)
- last 12 months’ bank statements
- SA302 form for tax calculation made by the Revenue
- A good credit rating
General Rules For Most Mortgage Applications
If you are a first time buyer then you will definitely need to follow these rules and gather the following information for the loan:
- consecutive last three months’ payslips
- recent P60/ wage slips or 3 years self employed accounts
- last three months’ bank statements- request bank originals- not internet bank print outs
- proof of the deposit monies- and how you came by it.
- Inclusion on the electoral roll
- Traceability of three years address history
- Debts being paid off at more than minimum rates on credit cards
Children Can Hamper Your Chances
Some more interesting criteria that can crop up are ones that you would not necessarily know about or consider would go against you. You need to be even more diligent if you have children because any outgoings for childcare will be checked. Credit card debts are heavily scrutinised as well. Even if you earn the same as a couple with no children, it seems that childless couples are be able to borrow substantially more than say a couple with two children and outstanding credit card balances.
In my opinion these rules in particular ( that are not publicised or talked about at all) amount to discrimination, but banks seem to be getting away with making the rules to suit themselves. So, if you are seeking a mortgage be sure all your ducks are in a row before you set out. Get all your documents in place in advance so that the application is not slowed down because of lack of information, and lastly, be consistent with the payment debts for a few months prior to seeking a mortgage.
Have you come across any other things requested by banks we have not noted here? – please do comment below so we can all benefit from your experiences.