Applying for your first mortgage can be a daunting experience. Tied in with the masses of paperwork and meetings with various banks and lenders is the worry that you will go through the whole process, only for your application to be rejected. This is doubly frustrating if you already have one eye on your dream first home.

While it’s never a given that you’ll be approved for a mortgage – lenders all have different criteria – there are steps you can take to maximise your chances. If you are considering applying for your first mortgage, follow this checklist to give yourself the best opportunity of success.

Deposit

When it comes to a putting down a deposit, the equation is simple: the more you can put down, the more likely you are to be approved and the better rates you’ll get. As an absolute minimum you should have a deposit that equates to 5% of the property’s value. However, there’s a significant jump between the rates you’ll get for a 5% deposit and what you’ll be offered if you can put down 25% of the value up front. It might be worth sticking with renting for a little while longer if your deposit is borderline, as it could equal savings in the long run.

One useful tip to remember is that mortgage rates often decrease as your deposit increases in 5% increments. In other words, you’ll get a cheaper rate for putting down a 10% deposit that you would for a 9% deposit, but the rate won’t go down again until you raise enough for a 15% deposit. Still, if you’re borderline it can be worth waiting until you’ve saved enough to reach the next 5% increment.

Credit Score

This is the first thing lenders will look at alongside your deposit. Your credit score is a record of your borrowing and payment history from the last 6 years and includes payments such as your utilities and phone contracts, your bank overdrafts and any loans and credit cards you might have. The more reliably you have made payments on all these items, the better your credit score will be. If you are not sure of your credit score you can check for free at Experian’s Credit Checker service. (Don’t worry – contrary to popular belief, this won’t harm your credit score. Learn more about this and other credit score myths here)

Your credit score is important for mortgage lenders because it shows them how financially trustworthy you are. A mortgage is likely to be the largest sum you will ever borrow, so they need to be as sure as they can that you will be able to pay it back. If your credit score is poor and you have time before you plan to apply for your first mortgage, it would be extremely beneficial to take steps towards improving your credit score.

Monthly Spending

In 2014, tighter regulations called MMR were introduced to ensure banks lend more responsibly. As a result of these, they can no longer rely solely on your credit score – or even your salary – as a means of deciphering whether you are a suitable candidate for a mortgage. They now need to look at your monthly finances as well, to ensure that you will have the means to pay back the mortgage at the rates you agree. Don’t be surprised, therefore, when your lender asks to see your banks statements and begins trawling through your monthly outgoings. They’ll look at expenditures such as phone bills and gym memberships, as well as how much you spend on activities such as going out or shopping.

To give yourself the best chance of being approved for a mortgage, cut down on any unnecessary spending. The good news is that lenders generally only ask to see three months’ worth of bank statements. So if you can hold off the Friday night curries or the morning coffees for just a quarter of a year, it could pay huge dividends when it comes to being approved for a mortgage.

Employment Status

Lenders are risk averse folk by nature. And there’s nothing that settles their nerves more than an applicant with a steady, permanent contract in a well-paid job. We know, we know. The gig economy is making it harder than ever before to secure a contract with the golden word ‘permanent’ stamped at the top. Lenders are aware of this, and sometimes it can be enough to show a steady income with the same employer for a period of 6 months or more. Either way, security is the golden goose here, so if you can remain in the same job for at least 3 months before making your application, you’ll be seriously upping your chances of approval.

For the self-employed, getting approved for a mortgage can be a little trickier. Most lenders like to see three years of accounts. They might ask for an SA302 form from HM Revenue and Customs, or for a print-out of your full accounts. Remember, they’ll obviously look on these a lot more favourably if they are showing profit, so leave a little for the taxman at the end of each financial year.

Use a Broker

Pre-2008, you could walk into your local bank and come out with an interest-only mortgage on a house you could never realistically afford. Getting approved for a mortgage is a lot more complicated now as the banks are far cagier about who they will lend to. This has opened gaps in the market – worthy customers are being refused mortgages because they don’t quite meet the banks’ stringent requirements. As a result, several other types of lender have emerged, catering for everything from the self-employed to lenders with bad credit and purchase situations that are a little unconventional. In order to navigate this ocean of options, you may find it helpful to seek the advice of a mortgage broker who will be able to advise you of the best deal for your specific situation. Very often these brokers take their fee from the lender rather than you, so it won’t cost you anything to use them and it could save a huge amount of time.

Are you saving for a mortgage while renting?

Credit Builder lets you improve your credit rating simply by paying your rent on time every month. Find out more here.