If you are applying for your mortgage, what factors are building societies going to be judging you on? It is a minefield of terms, but they are all quite easy. Only read this guide!
1) income. It is nice-looking obvious when you think round, but the more cash you are earning, the more a building society will be willing to lend to you. And if you are applying for a mortgage as a couple, then your joint pay packet might be considered, though this might not always work out the best!
For example, if your lender offers you 3 times your salary or twice your joint income, then if you are earning vastly over your partner, it may be preferable to just consider your wages.
2) Present Employment. Are you employed in a job where you have been for a few years and possibly looking financially secure there? Or are you seasonally employed, self employed or just just started a job and have a history of moving jobs every few months?
Someone who has a steady job and is likely to stay there a while and thus be able to manage the monthly repayments is going to be looked on more favourably than someone in a job that might not be there in a few months and may immediately start absent repayments.
3) Liabilities. If you currently have a lot of debts, maintenance payments and other payments that you are liable for, then these will have to be factored into what the building society reasonable considers you are able to repay each month and this will reduce the maximum amount that you might borrow within your mortgage.
4) LTV - Loan To Value. Or to put it another way, how much of your own cash you are able to put down against the property that you are buying. Until the recent financial crash, some lenders were over happy to actually lend you 125% of the value of the property that you are buying. Their reasoning being that in a few years your property should have increased in value by at least that much.
But these days, the maximum is more normally 90% of the value of the property, meaning that you need to be able to put down a 10% deposit at least. And the more deposit you could put down the better the interest rate you will be offered. This is for quite a easy reason. If they only lend you 70% of the mortgage and you default on your payments, there is a good chance that they will get all of their cash back, but, if you are borrowing 90% of the property's value and default, then it is more prospective that when they quickly sell your property they will not raise enough to cover the remaining debts.
5) Credit Score. What is your credit history and your credit score like? Do you have a lot of debts that you are struggling to repay or an immaculate credit history showing that you handle debts and their repayments perfectly? If you have behaved with your credit in the past you will be more likely to get a favourable rate than if you have struggled with debts.
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