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Five Ways to Increase Your Chances of Mortgage Approval

In the past five years, the amount of free-flowing money in the financial system has plummeted. Buyers that would have not been given a second glance in their attempts to secure a large mortgage are now being more carefully evaluated due to increased caution on behalf of banks over taking on too many risky mortgages. Thankfully, there are things that the everyday consumer can do to increase his or her chances of securing a mortgage. Here are five of the best ways to increase your chances of mortgage approval.


1) Gather your patience and start preparing for an arduous process. You first need to research your stuff, gather your paperwork together, and know everything that is going on. Paperwork that may be relevant for this includes pay stubs, bank statements, credit documents, assets, credit card bills, car loans, and more. It is a good idea to have an organised filing system in place for both your paper and online documents before getting any deeper into applying for a mortgage. This will save you a lot of headaches later.

2) Analyse your credit report. Look at your credit reports from all of the major credit-reporting agencies and make sure there are no inaccurate items on the reports. Perhaps up to one-third of people looking to secure a mortgage do not know their credit scores when they apply for mortgages, even though this is one of the largest factors that determines if your mortgage is approved and what your interest rate will be. A score well above 700 is generally needed to secure a mortgage with a lower interest rate.

3) Get rid of your debts. Before 2008, it was more common to see house payments exceeding 40 or even 50 percent of total income. Most lenders today believe that this is far too risky. You should look for your home payment not to exceed 25 percent of your income. Paying down your student, auto, and credit car debts before you take out a mortgage will help to raise your credit score and make you look like a more competitive applicant.

4) Make a larger deposit. Making a larger deposit makes you look as if you have made preparations for making this mortgage and reduces your loan-to-value ratio, both of which will make you more likely to secure a mortgage with a good interest rate. Research the organisations in your community to see if you qualify for a program to help people (especially first-time homebuyers) come up with larger down payments. Use a mortgage interest calculator like Clydesdale Bank’s to work out how a larger deposit would affect your monthly repayments.

5) Consider talking to your bank in person. If you are trying to get a mortgage approved from a bank with which you have had a long relationship, you may have better luck. If all your bank knows about you is what it has seen from five of your bank statements and your credit report, it may be prudent to start a face-to-face interaction with someone charged with approving or denying your application.

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