The TML says about 14% of adults in the UK plan to buy a home this year, but 34% of them could see their mortgage applications rejected because of poor credit histories. This comes as a result of rising costs of living and goods, with more people turning to unsecured borrowing and ‘buy now pay later’ products as a way to stay above water. This essentially makes it more difficult to get mortgage approval.
At LambornHill, our Sittingbourne property management team has also seen mortgage deals close to 1% recently dwindle as major high street mortgage providers raise their rates to counter rising inflation.
Despite these factors, it’s not all bad news. Our agents, who specialise in properties for sale in Sittingbourne, have seen many locals eventually break through the barriers to lending and owning their ideal home!
The mortgage market is vast, and each lender has different criteria. So it pays to know how to boost your chances of approval as either a first-time buyer, homeowner or landlord.
If you have been declined by a mortgage provider, it’s all too easy to apply to other providers straight away. After all, you’ve likely been planning to buy for a while, and it’s an exciting time. Yet, applying for a lot of credit over a short period can leave a mark on your credit history, which will lessen the chances of approval.
It’s also wise to steer clear of payday loans, especially when it comes to financing a house deposit, as lenders may believe that you will not be able to cope with the financial responsibility of a mortgage.
The easiest way to increase the chances of getting your first mortgage can come down to building a larger deposit and/or choosing a less expensive home.
Another option is to check the government’s website for active schemes for first-time buyers. Their Help to Buy: Equity Loan Scheme is worth checking out soon for a new-build home, as it ends in March 2023.
When remortgaging or obtaining a mortgage on a new home, you still need to undergo affordability checks. This shouldn’t be an issue as long as your credit score hasn’t fallen drastically since you started your current mortgage plan.
Another point to consider when remortgaging is whether your home’s value has fallen below your outstanding mortgage amount (negative equity). Typically, the best time to get a new mortgage or sell is when the value of your property increases above the outstanding amount (positive equity), which is highly probable in the current market as property prices are rising!
If it’s your first foray into the world of buy-to-let, you may be surprised at how important rental income forecasts are to mortgage providers. Yes, affordability and a healthy credit score are fundamental. Still, they also favour investors who can prove (via a market surveyor)that they can make more from rental income than their mortgage repayment. This is an interest coverage ratio of at least 25%.
For example, your mortgage repayment is £600 a month. The amount your rental property will have to fetch will be at least £750.
Professional mortgage advice can significantly increase your chances of getting a mortgage. Our Sittingbourne agents of properties for sale work directly with award-winning L&C Mortgages, who are happy to offer fee-free mortgage advice and compare a range of deals to find the perfect option. Contact us today.