Seven Things to Do Before Applying for a Mortgage
Applying for a mortgage is one of those life moments that sounds simple until you’re actually in it. You think it’s just filling out a form & waiting for approval, right? Wrong. There’s a whole maze of preparation that sits between you and that YES from a lender. And honestly, most people stumble into the application process unprepared. I’ve seen it happen more times than I care to count.
So what should you actually be doing before you even think about hitting submit on that mortgage application? Let me walk you through it.
Get Your Credit Score Sorted Out
Your credit score is basically your financial reputation wrapped up in a three digit number. Lenders look at it and decide whether you’re trustworthy or a risk. Simple as that. But here’s the thing… most people have no idea what their credit score actually is until they apply for something big.
Check it early. Like, months before you even think about mortgages. You can use free services like ClearScore or Experian to see where you stand. Sometimes there are errors on your report that drag your score down. I once knew someone who had a default listed that wasn’t even theirs. It took weeks to sort out, but it made a massive difference.
If your score is lower than you’d like, don’t panic. You can improve it. Pay bills on time. Get on the electoral roll if you’re not already. Keep credit card balances low. And for the love of all that’s holy, stop applying for new credit cards every time you see a special offer. Each application leaves a mark.
Perhaps the most overlooked thing? Close old accounts you don’t use. They can actually work against you sometimes.
Gather Every Document You’ll Ever Need
Lenders want proof. Of everything. Your income, your address history, your employment, your savings… it’s like they want to see your entire life on paper. Which, I suppose, they kind of do.
You’ll need at least three months of payslips if you’re employed. Bank statements going back three to six months. P60 forms. Proof of any bonuses or commission. If you’re self employed, prepare for even more scrutiny. They’ll want two or three years of accounts, SA302 forms from HMRC, and probably your firstborn child. Okay, maybe not that last one, but it feels like it sometimes.
Don’t forget proof of address either. Utility bills, council tax statements, that sort of thing. And if you’ve moved around a lot in recent years? You’ll need to document all of it. The lender wants to know you’re stable, not a flight risk.
Start collecting these documents NOW. Seriously. Don’t wait until you’re mid application and scrambling to find that one payslip from four months ago that you’re SURE you put somewhere safe.
Work Out What You Can Actually Borrow
This is where reality often bites. You might think you can borrow £300,000, but the lender thinks differently. And guess whose opinion matters more?
Most lenders will offer somewhere between 4 to 4.5 times your annual salary. Some go higher, but that’s becoming less common. If you earn £40,000 a year, you’re probably looking at around £160,000 to £180,000. Add a partner’s income into the mix & those numbers change. But there are other factors too.
Your monthly outgoings matter. A LOT. Lenders do what’s called an affordability assessment. They look at your regular expenses… rent, bills, loan repayments, even your Netflix subscription and gym membership. They want to make sure you can actually afford the mortgage repayments without ending up in financial trouble. Which is fair enough, really.
I think it’s worth using an online mortgage calculator to get a rough idea before you go further. But remember, these are just estimates. A proper mortgage broker can give you a more accurate figure based on your specific situation.
Clean Up Your Bank Statements
This one catches people out all the time.
Lenders scrutinise your bank statements like detectives. They’re looking for patterns of behaviour that might suggest you’re not great with money. Regular gambling transactions? Red flag. Constant overdraft use? Another red flag. Unexplained large deposits that could be undeclared loans? You get the idea.
So take a hard look at your spending over the last few months. If there’s anything dodgy or questionable, you need to be able to explain it. That £2,000 deposit from your parents for a car? Get proof it was a gift, not a loan. Those regular PayPal transactions? Make sure you can accomodate for them if asked.
Cut down on unnecessary spending in the months before you apply. I know it sounds boring, but that £150 a month on takeaways could be the difference between approval & rejection. Lenders want to see you’re sensible.
Save a Proper Deposit
The bigger your deposit, the better your mortgage deal. It’s that simple. Aim for at least 10% of the property value, but 15% or 20% opens up even better rates.
Let’s say you’re buying a house for £250,000. A 10% deposit is £25,000. A 20% deposit is £50,000. That extra £25,000 might seem like a lot, but it could save you thousands in interest over the life of the mortgage. The loan to value ratio matters enormously to lenders.
And here’s something people forget… you need money beyond just the deposit. There are solicitor fees, survey costs, stamp duty (depending on the property price), moving expenses, and all those little bits that add up fast. Budget for at least a few thousand extra on top of your deposit.
If you’re struggling to save, look into schemes like Lifetime ISAs or Help to Buy (though some of these schemes are being phased out or have already ended). Check what’s currently available because things change.
Talk to a Mortgage Broker Early
You don’t have to use a broker. You can go directly to lenders yourself. But honestly? A good mortgage broker is worth their weight in gold.
They have access to deals you won’t find on comparison websites. They understand the quirks of different lenders. Some lenders are more flexible with self employed applicants. Others are better for people with less than perfect credit. A broker knows this stuff inside out.
Plus, they can guide you through the whole preperation process. They’ll tell you exactly what documents you need, help you understand your borrowing capacity, and basically hold your hand through what can feel like an overwhelming experience. Some brokers charge a fee, others get commission from the lender. Make sure you understand their fee structure upfront.
I’ve seen people waste months applying to the wrong lenders, getting rejected, and damaging their credit score in the process. A broker can prevent that.
Understand the Current Market Conditions
Mortgage rates fluctuate. Sometimes dramatically. What was available six months ago might not be available now. Interest rates, lending criteria, everything shifts.
Fixed rate mortgages give you stability… your rate stays the same for a set period, usually two, three, or five years. Variable rate mortgages can go up or down. Which is better? Depends on what’s happening with the economy and what you can afford.
Right now, rates are higher than they were a few years ago. That means borrowing is more expensive. It also means lenders are being more cautious about who they approve. You need to be even MORE prepared than you might have been in previous years.
Keep an eye on financial news. I’m not saying become an economist, but understanding the general direction of interest rates helps you time your application better. Sometimes waiting a few months makes sense. Other times you should move quickly before rates go up again.
The Bottom Line
Applying for a mortgage without proper preparation is like turning up to an exam without studying. Sure, you might get lucky, but why take the risk?
Check your credit score early. Gather your documents before you need them. Understand what you can realistically borrow. Clean up your finances & save a decent deposit. Talk to a broker who knows what they’re doing. And keep an eye on market conditions so you’re not blindsided.
It sounds like a lot of work, I know. Because it IS a lot of work. But getting a mortgage is probably the biggest financial commitment you’ll ever make. Surely it’s worth putting in the effort to get it right?
Take your time with this. Don’t rush. And remember… rejection isn’t the end of the world. Sometimes it’s just a sign you need to prepare a bit more. Better to wait and get approved than rush in and face disappointment.