…getting a mortgage can be one of the most stressful financial undertakings you may ever take on, and even if you have complete faith in your answers to these questions, and know that you could make the mortgage repayments on your ideal property, the mortgage lenders may see otherwise.
If you are in the stressful position of not being able to ‘tick all the boxes’ to secure your mortgage, then what do you do?
This is where our West Sussex mortgage advisers step in. We can offer advice to get your finances in a far more attractive position for potential lenders, by objectively looking at your individual case and giving you tips accordingly.
A bad credit rating is never going to be appealing to any mortgage lender, as it implies that you may not be able to make your repayments. Often, you might not even be aware of your credit rating – many people are under the impression that everything is fine when in fact, there is a big red cross against their name. If you’ve always kept up with your repayments though, then why would there be a problem? Ironically, never having had any debt can actually work against you, as there’s no track record of you being able to clear it. Lack of financial history is never a good thing. If you think your credit score may be harming your mortgage application, keep an eye out for our advice on how to improve your credit score, coming in December.
Think that the one time you paid your mobile phone bill a few days late doesn’t matter? Think again. Every late payment is a mark against your name and not all lenders will care, or even look at, the amount in question. If it’s a box-ticking exercise then whether you paid a £20 phone bill a day late, or a £20,000 credit card bill a year late, you will still end up in the same box.
It makes sense that a lender will look at how much you earn before deciding whether or not to offer you a mortgage. Lower income earners are at a disadvantage here as quite simply, the less you have coming in, the less you can afford to have going out as your mortgage repayments. It’s not just about the money coming in though, and your expenses can also work against you. If you have few bills and low income then great, but if you have high bills, loans, car repayments and a number of dependents, then you will naturally have less money at the end of the month to make your mortgage repayments. Aside from cutting back where you can, there’s often not much you can do to make a significant dent on this figure, but all is not lost. Thanks to different types of mortgages, including help-to-buy, right to buy and shared ownership, there may still be ways to secure a mortgage.
If you’re self-employed then good for you! … but while you will experience numerous perks from this, you will often find it more difficult to get a mortgage. Self-employment typically results in a more fluctuating and less certain income, and as well as providing a financial history of what you have earned, some mortgage providers will want realistic projections of your take-home pay moving forward. If you have recently gone self-employed, or if you have made changes in your business, then this will naturally become trickier.
The greater the deposit, the less you will need to borrow. It’s that simple. Furthermore, the less you need to borrow, the more options you may have available to you from a larger pool of lenders who all see you as a more valuable prospect, so they may be able to offer you better repayment terms and/or lower interest rates.
What isn’t always simple though, is finding the required deposit to begin with. Generally speaking you will need to have at least 5% of the price of your home available as a deposit so it’s always wise to start saving as soon as possible.
Or more specifically, have you lived here for at least the past 3 years? If not, you will likely find it more difficult to get a mortgage. As well as checking your visas and employment contracts, many mortgage lenders are going to require proof of earnings, bank account details and a more in-depth history than they might have, had you been living in the UK for a longer period.
As independent mortgage advisers, we are not tied to any one lender, so we will always be able to look at your circumstances and then offer you whole-of-market advice, knowing which providers are more likely to offer you a better mortgage deal for your personal situation.
This article does not constitute financial advice and should not be construed as such.