Disclosure: This getting a mortgage post is a collaborative post.
Mortgages are some of the most difficult loans to get approved for. If you’re eager to purchase a property, it could be worth understanding some of the common obstacles that cause people to be rejected before you start your application. This could help you to better prepare. Plus it could help you make sure that your mortgage application is approved. Check out 10 of the common things that prevent people getting a mortgage below.
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Not having a large enough deposit saved up
You generally need to be able to put down a deposit of at least 5% when buying a home. This means that if you’re buying a home worth £250,000 you need at least £12,500 in savings to put down as a deposit. Being able to put down a higher deposit can improve your chances of being approved and could lower your rates. You can find mortgage calculators at sites like https://www.themortgagecentres.co.uk/ to help you work out what types of mortgage your savings will get you and whether that’s enough to buy a home.
Having a Poor Credit Score When Getting a Mortgage
A poor credit score can often hold people back when applying for a loan. Your credit score is largely determined by how well you pay bills on time, but can also be affected by other factors. If you have a low credit score, you may find it difficult finding lenders that approve you (and those that do will offer sky-high rates). There are many apps that can tell you your credit score. If your credit score is low, consider looking into ways to build your credit score (there are a few handy tips here at https://www.moneysavingexpert.com). .
Having No Credit Score – Getting A Mortgage
If you’ve never paid regular bills before or had debts, you may not have a credit score. Many young first-time buyers can find that they are rejected because of this. Consider finding ways to develop your score before applying for a mortgage such as taking out a credit card or looking into credit builder programs.
Having too low an income
If you have a low income, you may only be able to be approved for a mortgage with a low monthly rate. By finding ways of boosting your income, you’ll likely be able to afford a larger mortgage, allowing you to consider a greater range of properties. Consider whether this is necessary before you start applying.
Paying too many monthly expenses
Are your current monthly expenses very high? If they’re close or greater than your monthly income, you may find that you’re rejected. Mortgage lenders will usually look at six months of previous bank statements to determine whether you’re spending more than you’re earning – it could be worth cutting back your spending in the six months before applying.
Taking out unnecessary loans within six months before you apply
A history of taking out unnecessary loans could suggest to lenders that you’re not living within your means and therefore a more risky applicant. As mentioned above, lenders will look through six months of bank statements before approving you. Try to limit any large borrowing (small credit card purchases are usually acceptable) for the six month period before you make your application.
Switching jobs within six months before you apply
Most lenders will require you to have had a steady job for six months prior to applying for a mortgage. This shows that you have a steady income. If you’re thinking of switching jobs, consider doing this six months before you make any application. Or wait until you’ve purchased your home to look for a new job.
Not being on the electoral roll
There are some mortgage lenders that will use the electoral register to conduct a background check in order to check who you say you are. If you’re not on the electoral roll, lenders won’t be able to find this information and may reject you. Consider getting on the electoral roll before applying.
Making mistakes during your application
Silly mistakes such as inaccurately guessing how long you’ve been living at your current address. Or misspelling a name could result in your application being rejected. Some lenders will allow you to apply again, but many won’t if you’ve recently applied. Make sure to double check your application for errors before processing it.
Being Considered ‘Too Old’ When Getting a Mortgage
Once you get past 50, you may find that lenders are more cautious about approving long-term mortgages. After 65 you may struggle to get a mortgage at all unless it is a five or ten year term. Meanwhile, many lenders don’t lend at all to people over 75 (there are still some but it’s rare). Bear this in mind before applying.
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