Boost your mortgage chances

Don't expect every lender to fancy you

Every lender has its own method to decide whether it wants to lend to you. It's like a beauty parade and lenders will be rating you against their ideals. If you fit a lender's criteria, you'll most probably be accepted quickly. If you're far from ideal, you'll most likely be rejected by it.

But for people in the middle, it's more of a grey area and the lender's scorecard will be based on several factors, such as:

• The size of loan you want to take out
• How much you've saved as a deposit
• Your employment status and income
• Your credit rating
• Your outgoings
• Your existing debt

If you pass, it means it's more likely to lend to you but nothing is guaranteed.

Quick question:

Where does the lender's information about me come from?

Check your credit score before they do

You need to convince lenders that you've got the financial discipline required to pay back your mortgage. One way they investigate this is by searching your credit records to find out if you've a good repayment history.

Your credit file lists your past credit cards, loans, overdrafts, mortgages and even mobile phone and some utility payments, for all accounts that were open over the past six years.

And you can check your file for FREE. Credit ratings are big business. Agencies used to make money by flogging data to lenders, but our lust for credit means selling it to us is a hugely lucrative market. Luckily, it's easy to exploit this to get a free report.

How to get it for free

Credit rating agencies' top end service is 'credit monitoring', which costs up to £180 a year. To tempt you in they offer free month-long trials, which require you to set up a direct debit or regular credit card payment.

The trick is simple: sign up for a free 30-day trial with one of the providers below, then cancel before you start paying (preferably as soon as you've signed up and checked your details). This means you get the credit report for free. Use these links to get your reports:

• Equifax Credit Report*
• Credit Expert*
• Callcredit's Noddle service

For more information on how to do this read our Credit Scores guide.

Quick questions:

Can I get cashback for checking my file?

Can I check my file without having to sign up and then cancelling my contract?

What's recorded on my credit file?

What's not recorded on my credit file?

Correct credit score errors pronto

If your credit file info's wrong, you have a right to do something about it - either having the error corrected or, at the very least, having your say.

Your first step should be to check if the error is on your credit file held with other agencies, then talking to the lender. If this doesn't work, the free Financial Ombudsman could step in and order corrections.

Full step-by-step help

Register to vote or you'll have no chance

This is a dealbreaker. While you can have a perfect credit score without being on the electoral roll, it's still ALMOST impossible to get a mortgage without it. Lenders use electoral roll data in identity checks (to ensure you are who you say you are, and live where you say you live and that you're not laundering money).

Your credit file will say if you're on the electoral roll or not, but you can also check with your local council. Do this as early as possible. While you can usually be added within a month, in late summer and early autumn it could take longer.

If you're not on it, you can register on the electoral roll for free. If you're not a UK or EU national and thus can't get on the electoral roll to vote, then you can put a notice of correction on your file, saying you have other proofs of address and ID you can offer lenders (assuming that you do).

Your ex partner's score can wreck yours

If not, any late payments or misdemeanour they've committed will reflect badly on you. Write to the credit agencies and ask for a notice of 'disassociation'.

You could still be linked to old flatmates if you had a joint bank account for bills, so it's worth checking that their credit history isn't affecting yours. And also get yourself de-linked.

Even if the other person has a good history, you still risk problems in future if they miss payments. The Credit Scores guide has full details of what to do.

Carefully manage your available credit

This is all about how much credit you have available to spend on credit cards. It's the difference between your combined balances on all your cards and your combined credit limits.

You need to strike a balance between not having too much — as lenders may think you could rack up more debt by spending it all — and not getting too close to your limits, which makes it seem you're at the edge of your finances.

Credit agency Experian says that if you have debts, lenders prefer that they make up less than half your credit limits. So if your combined credit limit totals £10,000, they'd rather you use less than £5,000 of it.

If that's you, avoid lowering your credit limits so you're suddenly close to the edge. But you also don't want to be left having tens of thousands of pounds of available credit unnecessarily — new lenders get tetchy that you could suddenly be far more indebted than you currently are.

This is an art, not a science, and all lenders' views of how much you should have differ. Try to stay just below 50%. Of course, if you can pay off debt, you should do so.

Close old, inactive accounts or they can kill your application

If you're not using an account, it's worth closing it. Leaving it open could not only be a fraud risk, but could also mean some of your details may need to be updated.

See the Should I Cancel? guide for full information on why you should (and shouldn't) close old accounts. If you are closing an account, just cutting up the card isn't good enough — you must tell the bank you want it closed.

Want a mortgage? ALWAYS pay ALL your bills on time

It's obvious - so do it.

All missed payments count against you on your credit file, so it's vital to keep up all repayments on ALL your outgoings.

Defaults count against you for at least a year, and they'll stay on your file for the next six years. Miss just one mobile phone payment and it could be the difference between getting a mortgage and not.

Set up a direct debit on all accounts to make sure payments are made on time.

Don't apply for credit shortly before a mortgage

Try to avoid applying for credit in the three months before getting a mortgage - it could hinder your score and lead to rejection. Some recommend at least a six-month gap, to be absolutely safe. The Credit Scores guide has full info.

This is because lenders will search your credit file every time you apply for credit such as a loan, credit card, overdraft, or even a mobile phone or utility contract. This search is registered on your file even if you don't take out the contract.

The more searches you have in a short time, the less likely you are to be granted credit as you could be viewed as desperately seeking borrowing to repay debt.

If you NEED to apply for credit, it's unlikely that one application will hurt all that much, provided it's affordable.

BUT - if it's a payday loan, some lenders will decline you for a mortgage if you've had one in the past year. See our Payday Loans guide for more info.

Cut back on spending before you make your mortgage move

Lenders will ask for a lot of detail about your outgoings, and may even want to see bank statements to verify what you've told them. This is because new rules brought in in April 2014 mean the lender has to 'stress test' you.

Don't worry, this isn't hooking you up to wires checking if you're telling the truth - it's checking you'd still afford your mortgage if rates went up to 6% or even 7%.

The lender may ask for your latest three months' bank statements before you apply. It will use these to check your income matches what's on your payslips and examine your recent spending.

It's worth tightening your belt in the months before you apply. Don't go getting a round in for everyone in the local, or spending every Saturday night in a casino - especially if you're applying for a large mortgage that will put some pressure on your monthly budget.

It also makes sense to live a little frugally in the run-up to buying your first home. Moving costs are high, so every penny you save means a bigger budget to meet unexpected costs. See the Mortgage Deposit Calculator and How to Budget.

Stay out of your overdraft

If you're constantly in your overdraft, this could be seen as living close to the edge of your finances, so avoid it if possible. In fact, some lenders may not tolerate you being in your overdraft at all in the last three months.

And if you've no choice but to be in your overdraft, should you really be getting a mortgage?

To get a cheaper overdraft (if you really need it) see our Best Bank Accounts guide, but always budget to clear the debt as soon as possible.

Put down £100 extra on top of your deposit if you're on the border of a deposit band

Putting down a little bit more than the minimum deposit required can boost your attractiveness to the lender, or at the very least cut the amount of documentation it wants to see.

For example, instead of applying for a £75,000 mortgage on a £100,000 property (where the loan is 75% of the property value), apply for £74,900 if you can afford the extra £100 deposit.

All mortgages have a maximum loan-to-value (the amount you borrow compared to what the property's worth) but it's best to borrow just under this, if you can.

Sort your paperwork to speed things up

Lenders now have to see proof of your income before they can offer mortgages, so it makes sense to get your paperwork together in advance. Sending all the paperwork in one batch speeds up the proceess as it reduces the chances of your application being reviewed by more people.

Many lenders won't accept printed internet bank statements so you may need your bank(s) to send you original copies. Prepare these a few weeks in advance in case you need to wait for the originals to arrive.

Your lender may want to see any or all of:

• Your last three months' bank statements
• Your last three months' pay slips
• Proof of bonuses/commission
• Your latest P60 tax form (showing income and tax paid from each tax year)
• Your last three years' accounts or tax returns
• Proof of deposits (eg, savings account statements)
• ID documents (usually a passport)
• Proof of address (eg, utility bills or credit card bills)
• A gift letter. If you're getting deposit help, the lender needs to know it is a gift (not a loan), and that the giver won't part own the home.

Avoid delays - fill out the application form correctly

Test drive your mortgage chances

Once you've done all the steps above, your finances should be in great shape. To test this, a mortgage agreement in principle (AIP), offered by many lenders, is the acid test.

It's a conditional offer saying you may be accepted, based on a quick check of your income and, probably, your credit file. But it offers no guarantees & it's not compulsory. But for first-time buyers especially, it boosts estate agents or sellers' confidence that you'll be accepted, so may up your chances of having an offer accepted.

It's worth benchmarking a top deal with the MoneySavingExpert Mortgage Best Buys, and asking the lender (or your broker) to see if you pass the checks for their AIP. Don't worry - just as it doesn't tie them in to lending to you, it doesn't mean you have to borrow from that lender if you spot a better deal further down the line.

Beware - too many of these checks in a short space of time could harm your credit rating if the lender does a credit check and marks it on your file. This could damage your mortgage application later on.

Some lenders offer a 'soft' search option, which won't be visible. But find out from the lender which it is before agreeing to one.

Rejected? Throwing yourself at the next lender's feet will only make it worse

If you're rejected - FREEZE! Don't automatically apply again with a different lender. Too many applications will mess up your credit score, so don't do it. Instead, the first thing to do is to check your credit file again. Could you have missed something?

At all costs, avoid the rejection spiral. The nightmare example works like this:

• You apply
• You get rejected (sometimes falsely, due to an error)
• You apply elsewhere
• You get rejected again

This continues, until finally you check your files and get the error corrected. So...

• You apply again
• You're rejected because of recent 'searches'

If you're rejected once, immediately go to the top of this guide and follow the steps we've set out, or you may mess up your score as more applications mean more searches, which will compound the problem.

If you haven't missed anything and your credit file's still looking good, it could just be that the lender you applied to had its own reason for turning you down. It's worth asking the lender.

It should indicate to you the main reason you were turned down - and will tell you if that was your credit file.