Applying for a mortgage

21 Apr 2022

Before you arrange to meet with a mortgage specialist, you should check your credit score. This number suggests how likely you are to be accepted for a loan. The higher the number, the more likely you are to be given a raft of decent mortgage offers. Information on how to check your credit score and how to improve it can be found from the Money Advice Service. A mortgage lender will take into account the total amount you can borrow and how affordable your monthly mortgage payments will be when considering how much to offer you. The affordability assessment will take into account your income and your outgoings, and will consider any changes that might impact whether you would be able to make repayments. There are several different types of mortgages you could consider. These include:

Fixed rate - the interest rate will stay the same throughout the length of the loan, no matter what happens to interest rates in the market. When this period ends, you’ll move onto a standard variable rate (SVR), unless you re-mortgage.
Standard variable rate - this is the interest rate a mortgage lender applies to their standard mortgage and often roughly follows the Bank of England’s base rate.
Variable rates – this is when the rate can change at any time. Variable rates are often discounted for a period at the start.

Working alongside a mortgage expert can be a good way to get bespoke advice, although you are likely going to have to pay a fee. It may be especially useful to get advice if you are self-employed or have a low credit score. Before you begin viewing potential new homes you should obtain a mortgage decision in principle. This is a written statement from a lender giving an estimate of what they will be willing to lend you. Obtaining a decision in principle from one lender does not mean you have to take out a mortgage with them. However, as part of the decision in principle, the majority of lenders will carry out a credit search. According to the UK government website: “Some lenders will carry out a soft enquiry that will not affect your credit score. Other lenders will undertake a hard enquiry that may affect your credit score. You should find out what type of enquiry lenders use, as too many hard enquiries could negatively affect your credit score.”