things that affect your mortgage application

There’s a lot to wrap your head around as a first-time buyer: learning about all the costs involved with buying a property, getting the right documentation in place, understanding the process. But first, before you start looking, it’s important you are aware of all the things that could affect your mortgage application…

Poor credit rating

When it comes to buying a property, lenders will use your credit score and history to identify how responsible you are at managing your money. If you have a low credit score and show any blips in your credit history - like a missed payment - lenders may decline your application.

Before submitting a mortgage application, perform a credit check to identify your current position. If there is room for improvement, check out our tips here.

Something worth mentioning is that if you don’t have any previous credit history this can sometimes hurt your application too; lenders need evidence that you are reliable at making repayments. What you could do, is sensibly spend money on a credit card and pay it off on time to prove you can manage your finances well.

Debt

Just to clarify, you can still obtain a mortgage even if you have debt. Before you apply for your mortgage though, you should try to reduce your debt-to-income ratio and your credit utilisation. You can do so by:

•     Closing unused credit cards and loan accounts

•     Paying off as much debt as you can

•     Continuing to meet regular repayments

If you have a debt management plan, you might need help from a specialist mortgage advisor who can scour the market and find lenders offering more lenient terms.

No registered address

A simple thing you can do to improve your mortgage chances is being on the electoral roll registered to your current address. Lenders can check here to identify you. If you’re not registered, join here.

Employment status

Mortgage lenders are ideally looking for evidence of a stable job and income; 3-6 months’ worth of payslips are usually required. If you’re self-employed, lenders tend to ask for 3 years’ worth of SA302’s so that they can determine your average earnings. For those on probation or on leave it can be a little tricky. Lenders need evidence that you have guaranteed income so they might request a letter confirming that you will be starting on a permanent basis or returning to work.

If you’re worried a recent job or career change will affect your mortgage chances, please seek advice OR if you are self-employed or still on furlough, we have a blog you might find helpful. 

Providing incorrect information

Whilst this may be common knowledge, making sure that all the details on your mortgage application are correct and up to date is vital. A wrong figure or detail could prolong your application or result in it being turned down all together.

We hope you have found this blog useful and have a clearer understanding of those things that affect your application. Please remember, even if your circumstances aren’t favourable to Highstreet lenders, specialist mortgage brokers like us can find the most suitable lender and mortgage deal for your personal and financial circumstances. We’re a phone call away – 01633 987070