There are many considerations to take on when trying to improve your success rate on a mortgage or homeowner loan. Here are 7 key factors that will help improve your chances of securing a mortgage or homeowner loan:
1. Enroll on The Electoral Roll Register – It is extremely important in today’s market to ensure that you register with your local authority on the electoral roll. This will improve your chances of securing finance as the prospective lender will be able to accurately match you with all or any outstanding credit on your credit file. This will go a long way to improving your overall credit score on a lenders internal rate card.
2. Service Your Debt Sensibly – When managing your money ensure that you service all of your outstanding debts on time and for a sustained period as this shows any prospective lenders that you can manage your finances efficiently and correctly. This will give the lender confidence that you are a good candidate for a loan and will assist them with their decision to lend.
3. Manage Your Level of Debt – Try to keep your current level of debt within the parameters of affordability in relation to your monthly income. Lenders in today’s market will consider your debt-to-income ratio when deciding whether to lend or not. If you do feel you are using credit to service your debt or monthly payments are spiraling out of control, it is important you try to address the issue as soon as possible rather than waiting until it’s too late. Taking action today may save you from a worsening situation in the future.
4. Demonstrate Employment History – Most specialist lenders will require you to have at least 12 months continuous employment as this demonstrates stability of income prior to your mortgage or loan application. Therefore, if it is your intention to refinance in the near future , it would be wise to bear in mind that being able to prove stability of income is one of the major factors in any lenders decision to assist you.
5. Avoid Short Term Finance – In today’s short term ‘Pay Day’ loans market it has been hard for struggling individuals or families to resist their temptation, however, lenders consistently view this type of loan as a high risk factor, should it be evident on your credit history, when considering any application for finance. Instead of using ‘Pay Day’ loans providers to service your debt which include astronomical annual percentage rates (APR), you could use your credit card or seek out a term loan instead, in order to access and unlock the funds required. Lenders are happy to consolidate loans and credit cards (subject to status and criteria) however, there are many lenders that will NOT consider an application where the customer has any link to a ‘Pay Day’ loan within the last 12 months.
6. Know Your Creditors – It is imperative that you keep track of all your creditors and are aware of the total amount of outstanding debts you may have. This can range from store cards to credit cards, mail order catalogues to mortgages so keeping track of them is key. It remains good practice to keep an up-to-date spreadsheet with all of your outstanding balances and monthly premiums in order to remain on top of your finances. Regularly updating the spreadsheet will keep you on top of your debts and if you start to struggle from month-to-month you can then seek help from a specialist lender to consolidate these debts for you.
7. Maintain Your Debts During Application – If you have recently applied or been accepted for a mortgage or loan, it is extremely important to maintain your payment schedule on all debts until completion. Most lenders will continue to carry out credit searches right up until formal confirmation and completion of your recent application is agreed. Sadly, on occasion, we have had customers who have mistakenly believed that because they were already accepted in principle by a lender for a loan or mortgage, that they no longer had to service their current debts or keep up repayments in the interim period. In these unfortunate instances, we have been acutely aware of previous customers incurring further debts during this period of application which, through a lenders eyes, does not bode well for future affordability.
I hope that the above pointers help is some way to consolidating your finances ahead of the holiday period. If you would like to learn more or have any questions or queries regarding your future finance then please give us a call at The Loans Department where one of our team will be happy to help.
The Loans Department