Commentary: Mortgage rates are on the rise – how to get a mortgage secured quickly

 

Financial Expert Says Mortgage Rates Could Rise Next Month: These are Their Top Tips on How to Get a Mortgage Secured Quickly – by Peter Doherty

 

• In the last two months, over 60,000 people have searched for ‘mortgages’ in the UK.
• Searches for ‘how to reduce your mortgage’ have increased 200% in the last month.
• Head of Investment Research at Arbuthnot Latham heads advice to those looking for a fixed-rate mortgage to lock in within the next month, before potential rate hikes.

 

In the realm of personal finance, mortgages play a crucial role. A mortgage isn’t just a loan against your property; it’s a means to unlock your financial potential. But it has been an expensive time for mortgage payers with central banks hiking interest rates over the past two years.

 

Uncertainty around the direction of rates means that the ability to lock down an attractive mortgage deal has never been more important. Delays getting the right paperwork together can slow down a mortgage application, so it is important to have everything you need to get the application approved.

 

Peter Doherty, Head of Investment Research at Arbuthnot Latham, has offered their expertise and advice on the current mortgage rate climate;

 

“Since the beginning of 2024, the value of two and five-year interest rate swaps (what mortgage lenders use to price their fixed rate products) have started to rebound from lows reached in December 2023.

 

“Given there is a lag between these swap rates and mortgage rates, we expect upward pressure on mortgage rates in the near term, and thus those seeking to fix finding it potentially attractive to do so prior to mortgage rates re-pricing higher.”

 

These are the tips the experts at Arbuthnot Latham would recommend following to find a last-minute mortgage if you have been holding out on securing one with the uncertainty of the market.

 

Five things to prepare ahead of time to reduce the chances of delay in your application:

 

 

1. Proof of income

 

 

This requirement will vary depending on your employment status and source of income, but fundamentally you need to evidence that the income you have previously received will remain sustainable or that any future income (for example: starting a new job) will continue for the foreseeable future.

This can be done through a variety of methods, such as providing copies of pay slips, P60s, SA100s or HMRC tax computations.

Your employment status will influence what evidence you’ll need to provide:

Employed under a permanent contract: the lender will ask for your last three month’s pay slips. If you earn bonuses or commission the lender may ask for your last three P60s or pay slips showing the received payments to establish a yearly average.

Self-employed: the lender will need to see your last three years tax returns (SA100s) and HMRC tax computations.

Director/shareholder of your own company: the lender may request the companies’ last three years’ accounts, to verify the income you draw is sustainable.

 

 

2. Proof of expenditure

 

 

Most lenders will request copies of your last six months of bank statements. Lenders are looking for statements that show the income you have received versus payments you have made, therefore, if you use different banks or different accounts within the same bank, you may need to provide six months statement for each bank or account.

It can also save you time if you make your lender aware of any anomalous payments you have made in the last six months; these could include one-off purchases or transfers.

 

 

3. Evidence of existing debts

 

 

Lenders have several ways to identifying existing financial commitments, but it is often easier to highlight these as part of the mortgage application process.

Below are the most common forms of financial commitments and the typical documentation required by the lender:

 

Type of debt	Documentation evidence needed
•    Existing mortgages (that will continue after the mortgage you are applying for is drawn)	Your latest mortgage statement
•    Car finance, lease or hire purchase agreements	The signed contract will usually be sufficient
•    Personal loans	The signed contract or the latest loan statement may be requested
•    Credit cards	Your last six months statements

Each lender will have different documentation requirements for each type of financial commitment so having them all available is better than waiting for the lender to request the parts they need.

 

 

4. Property details

 

 

The most important information is the correct address of the property you wish to buy.

In addition, lenders will often want to know the property type, number of bedrooms, bathrooms, and any unique features, such as it being a listed property. One of the easiest ways of fulfilling this requirement is by retaining a copy of the property brochure (if this is online, it might be worth saving a copy to your computer as estate agents can remove them once a purchase is agreed).

 

 

5. Contact details

 

 

Make sure your lender has your up-to-date contact details and they are aware of your contact preferences. There could be other documents required by a lender to assess and agree a mortgage, therefore the key to securing a mortgage quickly is to respond to your lender’s requests for information as soon as possible.

Ensuring you have these 5 things arranged ahead of time will allow home buyers to lock in a mortgage quickly, avoid any delays on their paperwork and ensure they are prepared for when rates drop again.

For more information on how to secure the best mortgage for you, please visit https://www.arbuthnotlatham.co.uk/insights/five-ways-lock-mortgage-quickly