Are you planning to apply for a mortgage in the near future?
If so, there are steps you can take in advance to increase your chances of getting a YES from the bank.
- Practice good account conduct. Avoid going into overdraft by accident. This happens when an automatic payment is slightly more than the amount available in your bank account. While this may not involve a large amount of money, it can serve as a red flag for the bank and it can affect your chances of being approved for a mortgage later on.
- Avoid short term debt on consumer goods like TV’s, sound systems, expensive cars. If you can’t afford to pay cash right now, consider whether you should be buying it. Things that are on deferred payment really do matter in the eyes of the bank. Even if the weekly amounts going out are small. Avoid deferred payment plans if at all possible.
- Income is everything. Most banks will value regular income over a sizeable savings account. Even though a healthy savings balance potentially puts you in a better position to be able to pay your mortgage on time. Having lots of cash in the bank is great but it doesn’t guarantee the bank will approve you for a mortgage.
- Don’t go on holiday if it’s all going on the credit card. Banks will potentially scour your spending records and look for red-flags like excessive credit card spending.
- Job stability helps. The longer you have been with your employer, the better. Keep that in mind if you are thinking of becoming a contractor, or have a scattered job history and are thinking about making another move.
- For self-employed people, taxable income is what matters. Banks are looking at your income AFTER your expenses so keep that in mind when you are deciding what to claim.
- Consider using a mortgage adviser. They deal with multiple banks on your behalf, helping you find the option which is best for you. They know how to present your case to each bank which can increase your chances of securing an approval. Above all, they are on your side and are there to guide you through the process.