Can I get a mortgage?
You've got your deposit together - now it's time for the next hurdle!
Factors you need to consider
Getting a mortgage used to be the easy bit, before the credit crunch. Now there are many things you need to consider when applying for a mortgage. Here's a quick list:
How much deposit do you have?
Most first-time buyers start off with a relatively small deposit of 10%. Until recently, this was the minimum you needed to get a mortgage, but the Government have stepped in with their Help-to-Buy scheme - which allows you to get a mortgage with a 5% deposit.
[TIP] The bigger the deposit you have - the better the interest rate that will be available to you.
What's your credit history like?
When you are applying for your first mortgage, one of the biggest hurdles can be problems with your credit history. If you have had any problems maintaining your credit commitments, it can seriously affect your ability to obtain a mortgage. Find out more about your credit file here.
[TIP] Late payments on your credit card can effect your ability to get a mortgage.
How much credit do you have?
If you have a lot of credit commitments in the background it will affect how much you can borrow. This can be credit card debt, personal loans or car finance. If you are looking to take out a mortgage you should concentrate on reducing your debts and definitely don't take any new ones out.
[TIP] If you have less than 6-months remaining on a loan - you can discount it in many cases.
How much do you earn?
Put simply: the more you earn, the more you can borrow. It makes sense really as all the lenders now use affordability calculations to look at both your income and outgoings to assess how much they will lend you. The amount you will be able to borrow can (and will) vary dramatically from lender-to-lender - so it's always worth shopping about.
[TIP] Pension and student loan payments are likely to reduce the amount you can borrow.
Are you buying on your own, or with a partner?
The banks and building societies see joint applicants as less of a risk than single applicants and will offer you more money as a multiple of your income because of this.
[TIP] If your partner has bad credit, it can effect your ability to get a mortgage with them.
Go Direct or use a mortgage broker
Documents you'll need for your mortgage
Save yourself a whole load of time and effort by getting all your documents in order right from the start:
Proof of identity
If you're looking to get a mortgage you're going to need to prove you are who you say you are. Here's a list of acceptable documents:
Proof of address
You're going to need to prove you live where you say you do with one of the following documents:
Proof of income
To be able to work out how much you are able to borrow, you'll need to provide the following:
Proof of deposit
You need to be able to provide prove where your deposit has come from. Here's a list of suitable sources of deposit and the relevant documents you will need to prove you have it: