Unless you have a straightforward salary, with an exemplary credit rating and at least a 10% deposit, it can be tricky securing the mortgage that offers the best interest rates and that gets you a straightforward acceptance. We take a look at the issues that can stop you getting a mortgage.
Not Enough Deposit
Many mortgage providers will require you to have at least a 10% deposit lending you 90% loan to value of the home that you wish to purchase. Some will lend 75%-85% loan to value which means you will need a much higher deposit.
In the case of a 10% deposit, if you are looking to purchase a home that is £250,000, you will need £25,000 and they will lend you £225,000. This can be quite a challenge for many as they try to save enough deposit alongside paying rent and other bills.
For those that can stay at home with parents for minimal rent, the process is not quite so lengthy or arduous but it can still take a few years to save enough to make that next step.
There are however some providers who will lend a higher loan to value of 95% if certain conditions are met.
Failing Affordability Checks
Let’s go back to the example of needing £250,000 to secure the mortgage on your first home. You will save £25,000 for your deposit so you will need to borrow £225,000.
Most lenders will lend up to a cap of 4.5 x your annual income – some may stretch beyond this, others may not lend this much. If you were to base your calculation on the 4.5 theory, you will need to be proving an annual income of £50,000. However… they will take into account any debts, monthly commitments etc. so this needs to be income after these commitments are deducted.
If you are going to fall short of this, you may struggle to get the mortgage you need. An expert mortgage advisor, will be able to find those lenders that are more flexible and that can help you to secure the amount you need to purchase your home.
Bad Credit Rating
Missed payments, late payment, unsettled debts, count court judgements for non payment… these are all factors that can affect your credit rating along with how much outstanding debt you have or how much of your agreed credit you are using and are one of the common issues that can stop you getting a mortgage.
If you are concerned about your credit rating, it’s a good idea to check it out before you apply. This way you can save time and hassle by furnishing a mortgage advisor with everything they need to know about you so that they can offer the best advice and match you with the most relevant lenders.
Self-Employed Without Proof of Income
If you are self-employed and have not been trading for long enough to provide detailed accounts or proof of income, it can be tricky to get a mortgage lender to loan you what you are looking for.
Most mortgage lenders will ask to see 2-3 years of full accounts before approving any loan. It is a good idea, if you are self-employed, to enlist the services of an experience and independent mortgage broker who will have access to the whole of market and will find you the best lenders to suit your circumstances.
Certain Professions
In addition to being self-employed there are certain professions where salaries and renumeration packages can be confusing and tricky. Medical finance for doctors is one such area where you may need to jump through hoops to prove income and will be turned down by certain lenders.
In these circumstances, it is important to enlist the help of someone that understands the complexities of medical salaries and structures so that they can get you the loan that you need.
Age
The older you get, the higher risk you are considered when agreeing a mortgage. As most mortgages tend to be agreed over a 25 year term, lenders will want to approve those that can fulfil that term. If you are 75 years old and seeking a mortgage, this makes it a bit trickier.
There are lenders that specialise in later life ending so it doesn’t have to mean that you can’t borrow what you want, you may just need access to a specialist that can find these later life lenders.
Property Issues
Japanese Knotweed, a high risk of flooding, structural issues with the property or certain lease agreements on the land… there are many factors that can stop you getting a mortgage on a specific property.
Again, there are lenders that specialise in these sorts of circumstances, and that will offer a non-standard construction mortgage or an agreement for a fixer-upper property. It’s just knowing where to look.
Additional Issues
Not being registered on the electoral roll, having a history of payday loans or making errors on your application can all lead to a decline from a lender or can delay the process and cause additional stress and worry.
At Buzz Financial, our independent team of specialists have access to the whole of market and are specialists in securing mortgages in special circumstances. Just give us a call on 01934 756717 and let us help you with the issues that can stop you getting a mortgage.