September 7, 2020

7 things you shouldn’t do before applying for a mortgage


Crystal Group

“As a potential home buyer, you don’t want to do anything to jeopardise your chances of being granted a mortgage.”

Making any of the following mistakes could leave you out in the cold with lots of regrets but no mortgage deal!

7 things you shouldn’t do before applying for a mortgage

  1. Racking up debt

Your debt-to-income ratio (DTI), i.e. how much debt you have versus your monthly income, will be taken into consideration by prospective lenders when you apply for a mortgage. If your DTI is above 43%, you’ll be viewed as a risky borrower.

Therefore, you shouldn’t take on any more credit cards, loans, or other forms of debt while your mortgage application is being assessed.


  1. Forgetting to check your credit score

If you have a poor credit score, you may not be offered a mortgage. Lenders use your credit score to assess the likelihood of you being able to pay off your debts in the future. Before you fill out your mortgage application, check your credit score. If your score is low, take steps to improve it before you apply.

  1. Falling behind on bills

Your credit score is used by lenders as a major indicator of your suitability as a borrower. Falling behind on credit card or loan repayments will hurt your credit history and could indicate to the lender that you won’t pay your mortgage on time either.

  1. Overusing credit cards

If you exceed your credit card limit, you’ll damage your credit score. Overdoing it with your credit cards can also affect your DTI, potentially killing your chances of getting that precious mortgage.

  1. Closing a credit card account

You might think getting rid of one of your credit card accounts will impress prospective lenders. Well, that’s not necessarily the case. Closing down a credit card and therefore reducing your level of available credit, can cause your DTI to increase exponentially, potentially torpedoing your credit score.

  1. Acting as guarantor or co-signee on a loan

Think very carefully before agreeing to co-sign a loan or act as guarantor on a credit application for a friend or family member. By co-signing, you assume part of the responsibility for the debt. If the borrower defaults on repayments, your credit score could be seriously damaged.

  1. Making a hefty deposit into your bank account

Although your relatives may want to help you with your deposit for a new home, there are rules related to down-payment gifts. Generally, if you make a large deposit into your bank account immediately prior to applying for a mortgage, it won’t look good to a potential lender. Lenders usually like to see that you have ample funds in your account that has been there for at least two months prior to your application.

In conclusion

When applying for a mortgage, try to stay on track financially and make sure you’re making good financial decisions.

Avoid taking on more debt and keep control of debts you already have. Aim to have a healthy DTI and credit rating before you apply for a mortgage to give yourself the best chance of being successful.

See how Crystal can help you

We put in all the hard work so you don’t have to.

August 10, 2021

Tax relief for work outlays

In this guide, we take a look at how much money you might be...

June 23, 2021

PPI Tax Reclaim – How...

If you were awarded a pay-out for mis-sold PPI, you might be entitled to...

June 18, 2021

7 Facts You Need to...

If you were awarded a pay-out for mis-sold PPI, you might be entitled to...