ANYONE who has applied for a mortgage over the past decade will know that it can be a slog.
The banks may be loosening their purse-strings but you still go through a bit of a tap dance to secure a loan. Borrowers are put under the lenders’ microscopes as income and expenditure are gone over with a fine-tooth comb.
But a borrower can be wise and there are a few ‘tricks of the trade’ that will make life easier for prospective borrowers.
Here are six ways borrowers can get the upper hand.
Make sure you are registered on the Electoral Roll at home.
Having late payments for any type of loan or mortgage is an absolute no no.
Make sure that all credit cards are paid off on time.
If you don’t trust yourself to remember, set up direct debits to avoid the risk of missing a payment. And if you can’t afford to pay the full balance then set up a direct debit for the minimum payment and then pay off the extra when you can afford it (remember, balances over 50% of the credit-limit will affect your credit-score).
Spanish banks don’t have a concept of overdraft so don’t go overdrawn in your bank account at home unless, you can show that you are regularly transferring the bulk of your balance to an interest-bearing savings account…a badly-managed bank account can set the alarm bells ringing.
A good way to improve your score is to put all expenditure on a credit card (ideally one that gives you cashback or a similar incentive) and pay it off in full each month without fail. This has the added benefit that, when lenders see your bank statements it won’t be obvious where you spend your money or what you spend it on.
In the twelve weeks before you apply for a loan, run your bank account as if you already have a mortgage. It can be hard to put into practice but discipline is needed. Avoid excessive spending, cut out subscriptions and memberships that aren’t essential and don’t splash the cash on betting or gambling.
And most importantly, make sure you solicit the help of a good team that you trust.
Ensure you have a good estate agent, a good mortgage broker and a good lawyer. Together they can ensure a transaction goes through as smoothly as possible.