Financial Fitness

Get Financially Fit for Your Application

At Approvable Limited, we know that buying a home is one of the most significant financial decisions you’ll ever make. Being financially prepared not only helps secure approval but ensures you get the best mortgage rates available. Use our guide to take control of your finances and build a strong foundation for your application.

Understand Your Credit Report

Lenders use your credit report to assess your financial history and reliability.

What it includes: Information on current accounts, credit cards, loans, overdrafts, mortgages, and some utility accounts.
How to access it: Download your credit report for free during trial periods from Experian, Equifax, or TransUnion.
What to aim for: Avoid missed payments and defaults, as they can stay on your report for six years.

Pay Bills on time

Missed payments can significantly impact your creditworthiness.

Set up direct debits: Schedule payments just after payday to avoid missed deadlines.
Impact of defaults: Even a single missed payment, like on a mobile phone bill, could affect your mortgage chances.

Register to be on the Voters Roll

Being on the electoral roll can strengthen your profile during identity checks.

Why it matters: It confirms your identity and address to lenders.
If you can’t register: If you’re not a UK, Irish, or EU national, provide alternative proofs of identity and address and add a notice of correction to your credit file.

Check and Clean Up Joint Finances

Ensure you’re not financially tied to someone who could harm your credit profile.

Action steps: Write to credit reference agencies to remove financial associations with ex-partners or housemates once joint accounts are closed.

Manage Your Credit Carefully

Keep an eye on how much credit you’re using compared to what’s available to you.

What to aim for: Try not to use more than 25%-50% of your credit limit (for example, if your credit card limit is £1,000, aim to use no more than £250-£500).
Why it matters: Using too much of your available credit can make lenders think you’re struggling financially.

Whenever possible, try to pay off your debts before applying for a mortgage.

Monitor Spending and Bank Statements

Lenders review your recent bank statements to assess spending habits.

Avoid these red flags: Gambling transactions, excessive overdraft use, and inconsistent spending patterns.
What to show: Stable income, manageable expenses, and a positive account balance.

Additional Tips for Success

Saving for a Deposit

A larger deposit can improve your loan-to-value (LTV) ratio and secure better rates. Ideally, aim to save at least 10-15% of the property value. However, if your deposit falls slightly short of this, Approvable can explore options with lenders who assess applications on a case-by-case basis, considering your overall financial situation. It’s important to note that smaller deposits may limit your options, so being financially prepared is crucial.

Budget for Extra Costs

Plan ahead for additional expenses such as Stamp Duty, surveys, legal fees, and broker fees. If you need help understanding or budgeting for these costs, we can help.

Stay in Stable Employment

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Document Checklist

Please note that the outlined is not an exhaustive list of document proof you may be asked for. The required documents you will be asked for will be dependant on the lender or provider and your personal circumstances.

Prepare Your Documents

Having the right paperwork ready speeds up the process and shows you're organised.

Proof of income: Last three months’ payslips, bonus/commission statements, and latest P60.
Self-employed: Latest accounts and/or tax calculations and tax year overviews.
Bank statements: Last three months’ statements showing income and spending habits.
Deposit proof: Savings account statements or gift letters (confirming gifted funds are not loans).
Identification: Passport or driver’s license.
Proof of address: Recent utility or credit card bills.

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