These days, you don’t necessarily have to go to an interview to get a mortgage the way you usually do to get a job, but other than that the processes are, perhaps surprisingly, very similar. In a recruitment scenario, the recruiter is essentially asking themselves three basic questions:
- Can you do the job?
- Will you do the job?
- Will you fit in?
This is also what mortgage lenders want to know, so your mortgage application should aim to convince them that in your case the answer to all three questions is a solid yes.
Cover your basics, fill in the application the way you are asked
Employers have long used various tricks to work out which job seekers actually read adverts and follow instructions and which do not. One of those tricks is to specify how an application is to be submitted. In the old days it was often colour of ink (black not blue), these days it can be to include a particular word in your cover letter. Mortgage lenders aren’t usually looking to weed out candidates who can’t follow instructions, but they are likely to be using computer systems to process part, if not all, of an application and hence they may specify how data is to be entered into each field. If they do, make sure you follow the instructions. Also, make sure that any data you enter does completely answer the question, otherwise the best you can hope for is that a potential lender requests further information. They may, however, just decline you because you come across as unsuitable.
Can you do the job?
Remember that these days mortgage lenders are obliged to look beyond your headline income figures and think about your likely ability to repay a mortgage over the long term. This means you want to do anything and everything you can to convince them that you will be able to bring in an income over the lifetime of your mortgage. For example, if you had plans to upskill yourself and/or to start a side hustle with a view to bringing in extra money (at some point if not immediately), then it would be a great idea to set the ball rolling before you even applied for your mortgage.
Will you do the job?
A mortgage lender is going to look for evidence of how well (or badly) you have managed your money in the past, which means that they’re going to take a close look at your credit record. Do everything you can to make this look impressive. If you’ve had a chequered financial history, time may be your friend. Negative markers such as late payments drop off after a certain time. If you know you have them, you might want to check when that time is and see if you can hold off applying for a mortgage until after it is past. Once it is past, make sure it is removed correctly. Even if you have a perfect financial history, it’s still a good idea to check your credit record for mistakes (they happen) or to see if you can make any small touch-ups which could help you (like making sure you’re on the electoral register).
Will you fit in?
Does your application fall within the lender’s “comfort zone”? In blunt terms, a lender needs to think about how easy it would be to recoup their money in the event of a foreclosure. Standard, residential properties in popular locations tend to be relatively easy to sell on. Niche properties and properties in more out-of-the-way locations can be rather more of a challenge to sell. Similarly, buyers actually living in the properties, or at least in the UK, are easy to trace, whereas expat buyers may be perceived as rather more of a risk.
Your property may be repossessed if you do not keep up repayments on your mortgage.