The process of buying a property doesn’t necessarily start with you choosing your home. Often it takes months of preparation, or even years before you plan for a mortgage. You will need to make sure your borrowing history is in good shape, this way mortgage lenders will be able to see that you are reliable with paying back the money you owe.
Have a look below at some of the ways you can get yourself credit ready before you apply for a mortgage:
Registering To Vote
In order for lenders to confirm your address, you need to make sure you are on the electoral roll. Doing this will also help them to trace your credit history. If you’re not registered, it may be very unlikely that any lender would confirm your application.
Don’t Make Too Many Applications
Look At Your Credit History And Score
The best thing you can do is to know about your credit history and score before you apply. It enables you to make any changes that need to make sure you are in a good position to apply for the mortgage that you need. Your credit score shows you how creditworthy you will appear to lenders, if it is low, you can look in-depth and make the changes you need to improve it.
Reduce Your Debt-to-Income Ratio
This is the amount of debt that you have compared to the amount that you earn. The higher this number is, the higher your debt level. Lenders will usually look to approve someone who has a lower ratio, as it means you are much more likely to have the spare funds available to pay your mortgage. Have a look at things like the Debt to Success System to help.
Remove Any Unnecessary Borrowing
The six months leading up to your mortgage application try not to apply for any other credit. Doing this may increase your debt-to-income ratio, which could impact your appearance to lenders who could end up thinking you will struggle to pay your mortgage repayments back.
Keep Your Older Credit Accounts Open
These can demonstrate to potential lenders that you’ve been able to keep up payments over a longer period of time. If you have inactive accounts, on the other hand, they may show lenders that you have access to credit that you just don’t need.
Make Sure You Pay On Time
Even if your credit history seems in good order, don’t drop the ball and start to ignore or forget about bills. Your borrowing history records are ongoing, so if you have any slip-ups before you apply for a mortgage it might show the lender that you are going to fail on your mortgage payments.
If you’re thinking about applying for a mortgage, make sure you check your score in advance and take the steps you need to improve it or keep it on track. You want to be able to show that you are creditworthy.