23 Nov 2018
What stops you getting a mortgage?
On your journey to buying your first or next home, you’re going to need a mortgage – no surprise there. However, there may be some other surprises on the way. So, on the track of getting your first mortgage, what can derail your proverbial train? Well, in this post, we investigate.
Welcome back to Mortgages Online’s blog! This week, we’re looking at what can stop you getting a mortgage. Whilst there’s a whole host of things that can, and may well stop you, by knowing what they are, you know how to avoid them. So, your mortgage train can travel full steam ahead (we’ll stop with the locomotive speak now). This is ‘10 things that stop you getting a mortgage!’
1. Too Much Debt
The first of our 10 is having too much debt. Yes, if you’re applying for a mortgage and have too much debt in the background, it can actually stop you from landing yourself a mortgage deal. Lenders all have affordability checks, which takes Into consideration your income and expenditure, as well as loan/credit card repayments. However, it’s not just the debt you have, but the debt you could have. So, if you’ve got a credit card or an overdraft that you haven’t touched, but has a high limit on it, then it may impact what you could borrow. Before you apply, clear debt and close lines of credit that you don’t use. Unless you're looking at consolidating the debt onto your mortgage, but that’s a whole 'nother story. We actually have an article about debt consolidation.
2. No Credit
In the eyes of lenders, no credit is just as negative as bad credit. If you’ve got no credit history, then lenders probably aren’t going to be as forthcoming with the cash for your mortgage, because they have no way of seeing how reliable you are at making repayments. Your credit history establishes your reliability as a borrower, and if you don’t have one, lenders won’t know how good you are at repaying on time. Build your credit score before applying!
3. Credit Errors
Errors on your credit report can actually affect you getting a mortgage. Say, if you’ve got your old bank account details registered to the wrong address, well this counts as an error. It’s a tiny thing, but it’s important to make sure that all your details on your credit score are up to date. Missed payment logged against your name incorrectly? That’s definitely something you don't want to just ignore. Chase them up and get it removed. The sooner it's removed, the sooner your credit score will begin to improve.
4. Too Many Applications for Credit
Applying for a lot of credit in one hit can drastically impact your application. Lenders will see on your credit report that you’ve applied for multiple forms of credit, which could lead to potential debt and could imply you're panicking or desperate. Lenders aren’t going to be as keen to let you borrow their money if it could end up with you struggling to manage your repayments on your mortgage, because you have amassing debt. Make sure that when you apply for a mortgage that you haven’t applied for multiple other forms of credit too.
5. Moving House or Job – a lot
Just like it can affect your credit score, moving house a lot can affect your chances of getting a mortgage. If you’re constantly moving around or changing jobs, you may be unlikely to have your mortgage application approved. Lenders like certainty, so make sure you stay in the same home and job for at least a year before applying.
6. Not Voting
Another thing that can affect your chances of getting a mortgage is not being on the electoral register. If you’ve registered to vote, lenders have an easy way to determine where you live. This can improve your chances of getting a mortgage (and your credit score!)
7. Application Errors
Just like errors on your credit report can impact your chances of getting a mortgage, so can errors on your application. Lenders are very particular with mortgage applications, and everything needs to be correct and accurate. If a lender discovers something later down the line that wasn't initially disclosed, they will question why and are more likely to delve deeper into you’re application. So, make sure when it comes to applying for your mortgage, you’re disclosing everything, and it is all correct.
8. Unaffordable Mortgage
One thing that many people find is that their income doesn’t match up to the requirements of the mortgage they actually want. Lenders will check your income as part of their affordability checks, as well as the deposit you can provide, to see how much you they feel you can safely borrow. If you want to borrow more than they can offer you, it’s going to mean you won’t be able to get the mortgage you want. So, if you want to borrow more, look into other lending options like guarantor mortgages, other lenders or even save more of a deposit.
9. Struggling with Finances
We all know that your credit score determines if you’ll qualify for a mortgage. So, anything on your credit history that shows you’ve struggled with finances means that your mortgage application could be halted in its tracks. Minor financial 'blips' can sometimes be over looked after 12 months, but Major financial mishaps will remain on your credit report for around 6 years. In this situation, you can either wait until time has passed before you re-apply, or you can speak to a broker (us?) who may have access to other lenders on the market who specialise in mortgages for people in your situation.
10. The Wrong Lender
Finally, one more thing that can stop you getting a mortgage is using the wrong lender. If you haven’t weighed up all your options, with a smart tool that shows you all your options of mortgages you could be able to afford, how do you know you’re getting the best deal? Now, who do we know that has such a tool? Well, you’re looking right at it…
At MO we compare 1000s of deals from over 130 lenders to find the mortgage that’s right for you. If you provide us with all the correct info, we’ll show you your mortgage options!
Don’t derail your mortgage application, make sure that you don’t let any of these things affect your journey to buying a house! Use MO to find your ideal mortgage deal.
Mortgage made easy from MO.