Mortgage Applications: Common Mistakes

Applying for a mortgage is a significant financial step, and even small mistakes can impact your loan approval and terms. To help you navigate this process smoothly, we’ve compiled a list of common mistakes to avoid when making a mortgage application.

Not clearly demonstrating repayment capacity

Mistake: Proving your ability to repay a mortgage is a critical part of the application process – the lender needs to be confident that you can meet your monthly repayment without financial strain. Suppose you are relying on an overdraft to manage your finances each month, or you are supplementing your account with transfers in from your savings or another source (think tips/gifts etc). In that case, the lender may be concerned that you will have difficulty meeting your new mortgage repayment if any of those sources were not available.

Solution: If you are saving and meeting your rent each month, ensure you don’t skip a month or dip into your savings account in the 6 months prior to making your application. Operate your current account in credit and try not to overcomplicate your situation by having too many accounts as the bank will look for all of these statements (include Revolut/N26/Credit union etc). Don’t give the lender a reason to doubt your ability to take on this significant financial obligation – keep things simple. 

Applying for new credit close to your mortgage application

Mistake: Opening new credit card or taking out loans just before applying for a mortgage can negatively impact your affordability  and debt/service ratio which is a calculation used by most lenders. It can sometime reduce the amount you can borrow and might also delay your application.

Solution: Avoid applying for new credit at least six months before you plan to apply for a mortgage. Likewise, try hold off on large purchases like a car or furniture until after your mortgage has closed and you’ve moved into your new home.

Changing jobs before or during the application

Mistake: Changing jobs can make lenders nervous about your income stability, potentially leading to a delay/deferral of your mortgage application. Usually, you will have to complete a probation period before you can get your formal approval and complete the purchase.

Solution: Maintain stable employment during the mortgage application process. If a job change is unavoidable, provide your broker with all relevant information and documentation and they will work with your lender to try to accommodate you. Give your broker plenty of notice before making any major change to your circumstances so that that can advise you based on your situation.

Not checking your credit report in advance

Mistake: Failing to review your credit report before applying for a mortgage can lead to unpleasant surprises and delays.

Solution: Request a copy of your credit report before making your application – www.centralcreditregister.ie Check for errors and ensue all of the information is a correct reflection of your credit history. Provide this to your broker so that they have all of the information before approaching a lender – better to deal with any potential issues up front rather that the lender declining an application without all of the information to hand.

Not providing all of your financial Information upfront

Mistake: Inaccurate or incomplete financial information can lead to application delays, reduced loan amounts, or decline.

Solution: Be thorough and honest when providing financial information. Gather all necessary documents and provide your broker with as much information as possible. They are best placed to advise your and review your specific situation before your application reaches a lender.

Finally – Not using a mortgage broker!

Mistake: Approaching only 1 lender to make your mortgage application

Solution: While it is possible to secure a mortgage without a broker, using a mortgage broker offers valuable expertise not always available at your bank. Here at Prosperous Financial, we can offer you a wide range of options for your mortgage needs along with a personalised service from our advisers that can save you time, money and stress. We are here to help you avoid and or overcome the potential mistakes and to guide you through the process from start to finish. Whether you are a seasoned home buyer looking to trade up, a First-Time buyer or an ex-Pat looking to buy a property before you potentially return home, we have solutions and experts to help you. 

For more information or to get started on your mortgage application, contact us atkeys@prosperous.ie.