3 Common Mortgage Application Errors

Embarking on the journey to secure a mortgage can be as exciting as it is daunting. The prospect of owning your home is thrilling, but the application process? Not so much. We have picked the 3 most common application errors we see applicants make when they attempt to submit their own application and today, we will share how you can avoid them. Let's dive in!

First up, miscalculating your income. It sounds straightforward, right? You know what you earn, so how could this go wrong? Navigating the landscape of income calculation for a mortgage application is challenging due to the diverse criteria set by different lenders, particularly regarding bonuses, commissions, and overtime. Each lender has a unique approach to assessing income, making it crucial to understand these differences upfront.

Understandably an agreement in principle (AIP) and a full application requires differing levels of information and not understanding the criteria before submitting the full application can lead to disappointment.

Our tip: make sure to bring your last six months; payslips when you first sit down with your mortgage broker. This isn't just for a trip down memory lane; it's so they can figure out the formula each lender uses to assess your income and what you can afford. A good broken can help guide you towards lenders who will view your individual situation more favourably.

Moving on, let's address a crucial aspect of the mortgage application process: outstanding debts. It's important to consider how existing financial commitments, such as loans, car finance, credit cards, school fees, child care, can impact your borrowing capacity. These obligations can significantly reduce the amount of mortgage you qualify for.

Our tip: Transparency is vital in this scenario. Ensure you're fully aware of the exact monthly payments and the total amount owed. If you're planning to pay off any debts before finalising your mortgage, discuss this strategy with your broker first. This step is to demonstrating to the lender that you have managed your finances well and have sufficient capacity to take on a mortgage without stretching your resources too thin.

Finally, let's talk about an essential step in the remortgage process: property valuation. Accurately determining the value of your home is as important as any other detail in your application, especially if you're looking to borrow more funds. While you might see your home in the best light, it's crucial that the lender's valuation matches your expectations to ensure the loan to value calculations are favourable.

Our tip: From the outset, aim to provide a precise estimate of your property's value. Think of it as preparing your home to make the best impression possible. If a subsequent physical inspection reveals a discrepancy in valuation, it could negatively affect the terms of your loan, either by reducing the amount you can borrow or altering the interest rate offered to you.

The mortgage application process might seem complex and overwhelming at first glance. However, with the right preparation and knowledge of potential pitfalls, you can navigate it more smoothly. Employing the services of an experienced mortgage adviser who has intimate knowledge of the mortgage market can help you find the most suitable lenders for your individual situation and aim to secure the funding you need to make your ownership dreams become reality.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.