If you’re hoping to remortgage your property, whether it’s to reduce the amount you pay in interest or free up cash to spend on a large expense, you’ll need to ensure your finances are in good condition first.
Here are just a few ways to improve your finances and increase your chances of getting the best mortgage deal:
Prepare for strict affordability checks
Many people assume that because they’re already homeowners, lenders will approve their remortgage application without a second thought. But in reality, homeowners looking to remortgage will have to pass many of the same affordability checks that they faced when they applied for their first mortgage.
To speed up your application and make the process as smooth-sailing as possible, have bank statements, payslips and utility bills at the ready. Lenders may look at your bank statements to assess your spending behaviour, so avoid any erratic or heavy spending in the weeks before you apply.
Avoid accessing new lines of credit just before your application
Applying for credit in the months leading up to your mortgage application could make it harder to get a ‘yes’ from lenders. Whether you’ve applied for a new credit card or you’ve taken out a loan, lenders may look at these credit applications and question how healthy your finances are.
To be on the safe side, try to avoid accessing new lines of credit leading up to your remortgage.
Check your credit score
As part of the mortgage lender’s affordability checks, they’ll check your credit score. Your rating may have changed since you first got a mortgage, so it’s worth taking a look at your credit report to assess your repayment history.
Your credit report will list any credit cards, loans, overdrafts and even some mobile phone and utility payments. It will also include information relating to your mortgage repayment history. If you’ve ever made a late mortgage repayment or you’ve been in arrears, this will be visible.
There are a number of websites that allow you to check your credit score, but the most popular ones include Equifax, Experian and Noddle. Some websites will charge you for the service, but there are others that will give you a free trial. Be sure to check the terms and conditions before signing up.
Throw as much money as you can at the debt
If you have a substantial amount of money in savings, it may be worth throwing as much of this as possible at your mortgage. By doing so, you’ll gain access to more affordable mortgage deals, reduce the amount of interest you owe, and lower your monthly repayments.
However, it’s wise to keep between three to six months’ expenses in your savings account in case of a financial emergency.
Compare several lenders and deals
As tempting as it may be to simply approach your current bank and ask them for a mortgage, it can pay to compare a number of deals from a selection of mortgage lenders to find the best one for you.
A mortgage broker can be an invaluable resource when searching for the most affordable deal. They’ll compare hundreds of mortgage products from a wide range of lenders, and they’ll also highlight the providers most likely to approve your application.
If you’ve got an imperfect credit score, your income has fallen since your last mortgage was approved, or you’ve become self-employed, a mortgage broker will point you in the direction of the most sympathetic lenders and steer you away from those who are likely to reject you.
Since a rejected mortgage application can have a detrimental impact on your credit score, a mortgage broker can help to prevent the issue spiralling out of control.
If you’d like help remortgaging your property, please get in touch with the team at TaylorMade. We’ll take a close look at your finances before pointing you in the direction of the lenders most likely to approve your application.