What can those looking to buy in 2022 anticipate, as they seek approval for a mortgage?
Proof of Income:
The bank will need proof of income in order to approve your mortgage request if you are self-employed, on a part-time basis, or employed on a contract basis.
Although there can be exceptions to this rule, it is unlikely you will be approved if you’re seeking more than 3.5 times your current salary. The proof of income will differ depending on the type of employment, it can vary from monthly pay slips, audited accounts and salary certificates carried out by your employer.
10% Deposit:
Most first-time buyers are aware that 10% is the minimum deposit requirement, however, this is only the minimum. If the property you’re looking to purchase is worth 400k, for example, you will need at least 40k for your deposit.
Those seeking a mortgage must take into account the addition of both stamp duty and legal fees, which will hike the price of the deposit up to around 12%.
Deposits may come from savings, government help-to-buy schemes, or a gift from a family member.
Healthy credit history:
In order to get a mortgage approved, ensure the lender you are reliable enough to repay the sum in its entirety. The key to proving this is ensuring you are on top of your credit history.
If you’ve missed payments on loans, credit card bills, or even previous mortgages, you’re at risk of being declined. Lenders like to ensure they get a return on their investment, so you should always put your best foot forward when applying.
It’s also a good idea to review your bank account statements before applying; overdrawn accounts, missed direct debits, and severe financial stress will naturally weaken your application.
Regularity is vital when it comes to ensuring you obtain the mortgage you desire. Interest rates can fluctuate over the term of your mortgage, therefore a steady income, consistent savings and a proven track record of reliability will put you in a good position to buy your first home.
Some prospective buyers may find the housing market intimidating or unattainable at the moment, although they should focus on what is within their control. Getting a mortgage approval is within reach when all of the above is considered.
After you have received approval for your mortgage, you can begin searching for your dream home. However, it is a lengthy process, with mortgage applications typically taking up to six months.