9 Proven Strategies to Boost Your Mortgage Application Odds

So you are looking to purchase a new home, congratulations!

Before you start touring houses you need to know just how much you can afford and what kind of mortgage you will be looking at. Obtaining a mortgage can be a complex and challenging process but luckily there are steps you can take beforehand to increase your chances of being approved. 

When applying for a mortgage it is essential to present yourself as someone who is trustworthy of the money and will be a reliable borrower. When mortgage providers are assessing your creditworthiness there are a few key factors they will be evaluating. It is crucial that you start to think about these factors before applying for a mortgage to ensure you get the best chance of approval and mortgage rates when doing so.

1. Save for a Down Payment

Having a substantial down payment demonstrates financial stability and will make a significant impact on what you can afford when looking to buy. It is common to aim to save at least 20% of the home’s purchase price so you can potentially secure more favourable loan terms, and reduce the total amount you will need to borrow. This step can take a great deal of time for most people and so it is important to start thinking about this and saving well in advance. 

2. Maintain Stable Employment:

When applying for a mortgage it goes without saying that you will need to prove that you have the ability to make regular payments and so stable employment is crucial. Lenders prefer borrowers with a stable employment history, as it indicates a reliable income to repay the mortgage. If possible, avoid changing jobs around the same time you are applying for a mortgage as a consistent employment record helps establish trust and can improve your chances of getting a mortgage.

3. Improve Your Credit Score:

This is arguably the most important step in the process and one that will have a huge effect on your outcome when applying for a mortgage. Mortgage providers want to see that you are a reliable borrower and have a history of making payments on time and in full. Your credit score is the best way to show this and so you must be mindful of how you are utilising your credit. In order to have a strong credit score it is important to always pay your bills on time, and minimize your credit card debt. Improving your credit score can take time and even just one missed payment will stay on your credit report for years to come and so it is important to be consistent with your payments. Regularly monitoring your credit score and demonstrating good credit management can make a significant impact on your mortgage application.

One way that you can improve your credit position is by reporting your rent to credit bureaus. With Emma’s rent reporting feature, you can utilize your rent payments as another way of demonstrating your creditworthiness. For many people paying rent is one of their largest expenses and rent reporting enables you to utilize these payments by reporting them directly to major credit bureaus Experian, Equifax and TransUnion. Simply switch on rent reporting, select your payment from your history and Emma will automatically report those payments going forward! Even if you make a late or missed payment, rent reporting has no negative effect on your credit score as those months are simply not reported. 

4. Gather necessary documentation

The process of getting approved for a mortgage involves a number of checks and compiling the necessary documents beforehand will make the process far quicker when you are ready to apply for a mortgage. By organizing the necessary financial documents, such as tax returns, pay stubs, bank statements, and proof of assets beforehand you will streamline the process and be thankful when it’s time to apply. 

5. Pay off Outstanding Debts

If you have the ability to pay down any existing debts you may have, your mortgage approval will benefit. By lowering your overall debt load you can become more attractive to potential providers and improve your overall financial profile. This can also improve your credit score as part of the score is calculated from your credit utilization ratio. It is typically seen as best practice to avoid utilising more than 30% of the credit available to you. By paying down debts and lowering your credit ratio your credit score can benefit. 

6. Get Pre-approved:

By getting pre-approved for a mortgage it not only will allow you to have a better understanding of how much you will be able to afford but it also shows potential sellers that you are a serious buyer. Additionally, getting pre-approved can speed up the mortgage application process down the line. 

7. Work with a reputable mortgage broker: 

Taking on a mortgage is a huge financial decision and so it is important to do extensive research beforehand. For many people purchasing a home is the largest purchase they will ever make and so it is not to be taken lightly. It is incredibly important to choose a reputable lender who offers competitive rates and favourable terms. There are a number of resources that allow you to compare different providers and rates and there is no harm in getting a quote from multiple lenders. 

8. Consider a co-signer or joint application

You may be able to increase your chances of getting a mortgage by doing a joint application or adding a co-signer to the application. This is an attractive option for a number of reasons. For people who have a lower credit score or high debt to income ratio the addition of someone with better credit can increase your chances of getting approved or help you secure a larger loan or more favourable conditions. 

9. Seek professional advice:

Our last tip on how to increase your chances of getting a mortgage is to work with professionals who can provide valuable insights about the process. By seeking out the guidance of a mortgage broker or a financial advisor they can provide you with personalised advice to help your specific financial situation. 

Securing a mortgage is an important milestone on the path to homeownership, and it requires careful planning and preparation. By implementing the strategies mentioned above, you can enhance your chances of success when applying for a mortgage. These steps will not only increase your likelihood of mortgage approval but also put you in a stronger position to negotiate favorable loan terms.