Boosting Your Chances of Mortgage Approval Jan 23, 2024

Fear not! If you're in the midst of navigating the UK mortgage market, here are some pratical steps to improve your chances of getting "Mortgage Approval"

The reality of owning a home is a journey paved with paperwork, financial evaluations, and more than a dash of anticipation. For many, the pivotal step is the mortgage approval, a moment of elation when the bank says, "Yes, we trust you enough to lend you this money." Yet, there are instances where hopefuls face rejection. Fear not! If you're in the midst of navigating the UK mortgage market, here are some practical steps to improve your chances of hearing that much anticipated "yes".

Understand Your Credit Score

Your credit score is essentially your financial CV. It tells lenders how reliable you've been with past credit. Obtain a copy of your credit report from major UK credit bureaus like Experian, Equifax, or Clear Score, and review it for any discrepancies or outstanding debts.
Promptly correct any mistakes to ensure your score isn’t unjustly lower!

Reduce Your Debt-to-Income Ratio

In the simplest terms, this ratio indicates the percentage of your income committed to debt payments. The lower the ratio, the better your chances. Before applying for a mortgage, aim to reduce any outstanding debts, whether credit card balances, loans, or otherwise. It portrays financial responsibility and reassures lenders.

Save for a Sizeable Deposit

A larger deposit reduces the initial amount borrowed, which equates to lower monthly repayments. This can ease the financial burden on the borrower and increase the likelihood of timely payments. They also often result in a better interest rate, as lenders perceive a reduced risk with borrowers who invest more upfront. This can translate to substantial savings over the life of the mortgage.

Steady Employment History

When considering a mortgage application, lenders place significant emphasis on an applicant's employment stability. A consistent job history suggests a reliable income, which is a strong indicator of an individual's ability to manage and meet monthly mortgage repayments. Just as a business would value a long-term client over a sporadic one, lenders view those with steady employment as a safer bet. In the realm of mortgage lending, a solid work track record is undeniably an asset, reflecting the applicant's financial responsibility and commitment.

Realistic Property Valuation

Before granting a mortgage, lenders conduct a thorough assessment of the property in question. If their valuation is lower than your intended purchase price, it could affect your chances of securing the mortgage. To mitigate this risk, it is wise to conduct an independent property survey, such as a "HomeBuyer's Report" or a "Building Survey," depending on the age and condition of the property. In addition, conducting an exhaustive market study before completing an offer can provide further insights into the true value of the property.

Use a Mortgage Adviser

The UK market has a wealth of mortgage products, each with its specifics. A reputable mortgage adviser can match you with a lender more likely to approve your application, given your unique circumstances. They can also provide invaluable insights into documentation, ensuring you present your financial history favourably.

Be clear and complete in your application

Misleading or missing information can quickly lead to rejection. Take the time to collect all the necessary documents and complete the application with precision. If there are financial hiccups in your past, address them openly. Honesty and transparency often go a long way.

Evaluate Affordability Beyond Mortgage Rates

Consider all homeownership costs, including insurance, taxes, and maintenance, before deciding on a budget. This way, you won't stretch too thin, ensuring lenders are well-prepared for long-term commitment.

Hold Off on Major Purchases

Before or during the mortgage application process, avoid large purchases, like a new car. Such expenses can increase your debt-to-income ratio or reduce the funds available for the deposit.