If you’re looking to buy a house shortly, you may have asked, ‘Do mortgage lenders do a final check before all’s said and done?’. Now, if you’re considering buying a house, it’s crucial to understand the role of the mortgage lender and the mortgage broker. In this blog, we’ll explore everything you need to know about final completion checks and how to improve your chances of getting approved.
What is a Final Mortgage Credit Check?
So, if you’re curious about this ‘Final Mortgage Credit Check’ and what it means, let’s look closer. This is the final look your mortgage lender takes at your financial health before they say, “Here’s your mortgage!”
But why is it so crucial? This final check is essential for mortgage lenders as they want to ensure everything’s secure with your finances before they approve your mortgage. They’ll look at your credit report to ensure there haven’t been any big changes since you first applied. After all, they want to be confident that you’re still a good bet and can comfortably repay the mortgage. Stay tuned as we dig deeper into the process.
When is the Final Credit Check Before Mortgage Completion Done?
Moving onto the ‘when’ of the matter. If this is a process you’re about to go through, you may wonder, “So when does this happen?”.
The final credit checks are typically done a few days before completion, sometimes even as close as the day before you have exchanged contracts. They want to be sure nothing drastic has changed in your financial circumstances since they last checked. It’s a bit of a nerve-wracking moment, but as long as you’ve kept your finances clean, there’s no reason to worry.
What Do Final Mortgage Credit Checks Involve?
Just what exactly are these final mortgage credit checks looking for? Let’s break it down.
Evaluation of Your Credit History
First off, they’ll want to take a close look at your credit history. This isn’t just about checking your current credit score but also about understanding how you’ve managed your credit record in the past. Have you been making your repayments on time? Do you have any missed payments lurking in the shadows? All these factors can influence a lender’s decision.
Examination of Your Current Debts
Next up, your current debts come under the spotlight. The lender will want to see how much you owe and to whom. Credit cards, personal loans, car finance – everything goes under the microscope. The more you owe, the more cautious a lender might be, as it could impact your ability to meet mortgage repayments.
Verification of Your Income
Then, there’s the money coming in. The mortgage lender will want to double-check your income to ensure it’s still the same as when you applied. That could be a red flag if you’ve had a pay cut or lost your job. But on the flip side, a pay rise or a new job might make you an even more attractive prospect.
Changes in Your Personal Circumstances
Lastly, they’ll want to check for changes in your circumstances. Have you suddenly become self-employed? Or have you taken out a massive loan for that shiny new sports car? Any major changes could affect your mortgage application, so it’s best to keep everything on an even keel until the deal is done and dusted.
Consideration of Your Age
Now, let’s chat about another factor that might crop up: your age. Mortgage brokers and lenders want to make sure that you’re of legal age to take on a mortgage and that you’re not so close to retirement that it could jeopardise your ability to repay the loan. Remember, the typical mortgage term is around 25 years, so your age at the start and predicted age at the end of the mortgage can play a part in the lender’s decision.
Review of Your Regular Outgoings
And here’s one more thing they’ll want to look at: your regular outgoings. When it comes to your mortgage, lenders are going to be looking at how much you typically spend each month. Everything from groceries to gym memberships, childcare costs to your Netflix subscription all comes into play here. They want to see that, after all, your regular bills and expenses, you’ve still got enough cash left over to cover your mortgage repayments comfortably.
How to Increase Your Chances of Passing These Checks
So, you’ve got the lowdown on what’s involved in these final credit checks. Now let’s turn our attention to how you can boost your chances of sailing through them:
Keep Your Financial Nose Clean
No missed payments, no sudden splurges, and definitely no new debt. In fact, try to lower your existing debt if possible. The cleaner your credit report, the more likely you will get the lender’s green light. Remember, they want to see stability and responsibility, so always be prepared!
Avoid Any Major Changes
Next, steer clear of any major changes. Now’s not the time to quit your job and embark on a new career as a freelancer. Any significant changes to your income or outgoings could raise eyebrows with your mortgage lender. Keep everything as steady as possible until the mortgage is confirmed. As tempting as making a big life change might be stay clear until the paperwork is signed, sealed, and delivered.
Keep Your Credit Utilisation Low
Another top tip is to keep your credit utilisation low. What’s that, you ask? It’s how much of your available credit you’re using. So, if you’ve got a credit file limit of £2,000 and use £1,500, your credit utilisation is 75% – that’s pretty high! Try to keep it below 30%. The lower it is, the better your credit score and the more likely you will pass the final credit checks.
Notify Your Lender of Any Changes
Last, but by no means least, keep your lender in the loop. If something changes – maybe you’ve got a new job or received a windfall – tell your lender as soon as possible. They don’t like surprises, and they should hear it from you than discover it on a credit report. Be upfront and honest, which could help smooth the path to mortgage approval.
What To Do if You’ve Failed a Final Credit Check
So, what happens if things don’t go quite according to plan with the final mortgage credit check? Not to worry; it’s not the end of the road. Here’s what you can do if your mortgage offer is a no-go after the final checks.
Contact Your Lender
First things first, reach out to your lender. Find out exactly why they’ve declined your mortgage offer. Was it a late payment on a credit card, or maybe they spotted an issue with your income? Once you know what the issue is, you can set about sorting it out.
Review Your Credit Report
If the problem lies in your credit report, you’ll want to know what’s dragging you down. You can use a few credit reference agencies to check your report. Review it with a fine-toothed comb and ensure all the details are correct. If you find any errors, contact the agency to have them corrected.
Improve Your Credit Score
If your credit score was the culprit, you’ll want to improve it. This might mean paying down debt, ensuring all your bills are paid on time, and keeping your credit utilisation low. It may take some time, but think of it as setting the stage for a successful future mortgage application.
Consider Seeking Advice from a Mortgage Broker
Finally, consider having a chat with a mortgage broker. These experts can provide valuable advice on improving your chances of passing the final mortgage credit check next time. They’ll also be able to guide you towards lenders who might be more lenient or better suited to your financial situation.
Jones and Young: The UKs Expert Mortgage Brokers
Here at Jones and Young, we take pride in being one of the UK’s leading mortgage brokers. Why’s that, you ask? Well, it’s simple: we’re all about making the mortgage process as smooth as possible, taking the guesswork out of every step, including that all-important final credit check.
With our experienced team at the helm, you’re in safe hands. We’ve navigated the waters of mortgage applications more times than we can count. We’re here to guide you, provide advice, and liaise with lenders on your behalf, ensuring that your journey towards home ownership is as easy as possible. So, you can count on Jones and Young for an expert touch on your mortgage journey.
That wraps up our comprehensive guide on the ‘Do Mortgage Lenders Do Final Checks Before Completion.’ We’ve looked at the ins and outs of final mortgage credit checks, given you the knowledge to increase your chances of passing them, and even offered some tips if you fail them.
Getting a mortgage deal might feel like a challenge initially, but with the right preparation, an eye on your finances, and a touch of patience, you’ll soon have the house of your dreams. And remember, here at Jones and Young, we’re always here to lend a hand and ensure your journey to homeownership is a smooth one. So, keep calm, carry on, and happy house hunting!
Mortgage Checks FAQs
We’ve answered some of the most frequently asked questions about mortgage checks below:
Yes, it’s common for mortgage lenders in the UK to conduct a credit check again before closing. This allows them to verify that your financial circumstances have not significantly changed since your initial mortgage application. Lenders want to ensure you still meet their lending criteria and can afford the mortgage repayments.
Before completion, lenders typically perform various checks to ensure everything is in order. These checks may include verifying your employment and income details, confirming the property valuation, reviewing the mortgage offer, and assessing any outstanding conditions or requirements. The goal is to ensure all necessary documentation and information are in place before the completion date.
On completion day, the lender primarily focuses on transferring the mortgage funds to the solicitor or conveyancer handling the transaction. They coordinate with the solicitor to ensure the smooth transfer of funds and handle any outstanding paperwork. While the checks conducted on completion day are more administrative, ensuring that all legal and financial requirements are met for successful completion is important.
Yes, a mortgage offer can expire before completion. Mortgage offers typically have an expiration date, which is usually 3-6 months from the date of issue. If the completion is delayed or takes longer than anticipated, there is a possibility that the mortgage offer may expire. In such cases, contacting your lender and discussing the situation is important. They may be able to extend the offer or provide guidance on obtaining a new one.