5 Reasons You May Struggle to Secure a Mortgage

With the average property currently costing approximately £186,325 across England and Wales, saving for a deposit on a home can seem like the largest hurdle to overcome in order to purchase a property. However, it’s not uncommon for home buyers to struggle to get on the property ladder even with a healthy deposit saved. Whether you’ve just started a new job or your credit rating is low, there are various reasons why lenders may turn you down. Let’s look at a few of the mortgage-securing obstacles that could stand in your way.

You can’t afford repayments

When you first approach a lender, they will conduct an affordability check to assess how much money they’d be willing to lend you. This affordability check will look at a number of things such as your income, the deposit you’ve saved, and your typical monthly expenditure.

If the lender comes to the conclusion that you’d struggle to make repayments based on the above information, they may refuse to lend.

To minimise the risk of this happening, we recommend the following:

• Try to boost your income
• Save as large a deposit as possible
• In the months leading up to your application, reduce your spending

You’ve never borrowed money before

If you’ve never needed to borrow money before, you may be feeling pretty confident about your chances of securing a mortgage. However, this can actually work against you as lenders will struggle to determine whether you’re responsible when it comes to paying back the money you’ve borrowed or not.

Before applying for a mortgage, it can be a good idea to take out a credit card in order to build up a credit history. However, avoid applying for several different types of credit at once because lenders may assume you’re in urgent need of cash.

It’s worth noting that if you apply for a mortgage and your application is rejected, your credit rating will be negatively affected. As a result, it could be worth seeking the help of a mortgage broker. They’ll know the mortgage market like the back of their hand and will be able to point you in the direction of the most suitable lenders.

You’re in debt

When assessing whether you’re eligible to borrow money or not, mortgage lenders will look closely at your history of debt. If you’ve been in a substantial amount of debt before or you currently have any debts that remain unpaid, your application may be refused.

You’ve just started a new job

The length of time you’ve been with your current employer can sometimes determine whether you’re eligible for a mortgage or not. The amount of time required varies between lenders but is usually somewhere between 6 months and a year.

As a result, if you’re hoping to switch jobs, perhaps hold off until you’ve secured a mortgage and have bought a property.

You’re self-employed

Self-employed people sometimes find it harder to secure a mortgage than those in full time employment. This is because the income of someone who is self-employed is often considered to be less stable. As a result, lenders may be concerned about your ability to keep up with monthly mortgage repayments.

However, obtaining a mortgage when you’re self-employed is certainly not impossible, providing you meet lenders’ other criteria. They’re likely to want to see at least two years’ accounts or tax returns to assess your income. You’re also likely to need a strong credit record and a substantial deposit.

This article was created by Gorvins, a conveyancing solicitors based in Stockport.

Author: Editor

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