I saw a refused mortgage application, how can I get one accepted?
I’m looking to buy my first home, but I’ve been turned down for a mortgage in the past.
I’ve heard that applying too often can put your credit on your credit score.
My credit rating is already bad and I’m afraid if I’m turned down again it will only get worse.
What are my options?
If you have a bad credit history or are heavily in debt, your mortgage options may seem limited
This is Money’s Will Kirkman responds: There are many horror stories of mortgage providers turning down applications for ridiculous reasons, like seeing a dirty word on a bank statement.
In reality, this doesn’t happen very often, but if you have a bad credit history, have used payday loans, or are heavily in debt, your options may seem limited.
This is a real worry for many people trying to access the housing ladder – a study by Compare The Market recently found that nearly a third of the public don’t think they would qualify. to a mortgage.
But seven in ten admit to never trying to improve their credit rating in order to increase their chances of being approved.
Making small changes like getting a credit card, spending a bit on it regularly and paying off all the debt every month, getting on the voters list, paying off debt, or saving more regularly can greatly increase your chances of success.
We asked two mortgage brokers for their advice on what to do next.
Nicholas Morrey, from broker John Charcol, responds: It is worrying that such a large proportion of the population thinks they do not qualify for a mortgage without even talking to a broker.
Many don’t know that being turned down for how much they want to borrow and being turned down for any loan is not the same thing.
In addition, they may not know that refusal by one lender does not mean automatic refusal by all lenders.
A request denied by a lender does not mean that all lenders will automatically deny you
Here are some ways to improve your chances of being accepted:
Register on the electoral list – preferably with an address history of three years. Contact your board and ask them to update their records and if you move during this time, be sure to notify the board of the changes.
Nicholas Morrey from broker John Charcol
Get all of your bills, loans, and credit cards through direct debit for at least minimum payments. This prevents any credit commitment from being even a day late, which is often recorded on your credit report as missed even if it is 24 hours late.
Do not take your outstanding balances on the cards at the full amount. Lenders look at the amount of credit outstanding and the amount of credit available to see how much you are using for short-term credit financing.
Ask lenders if their systems make a “decision in principle” that performs a “soft credit search”. If not, you are leaving credit footprints on your file for other businesses to see and too many of them can impact future loan decisions.
Don’t be discouraged if the first lender you try says no to what you want. Would they lend you the money – but not the amount? Lenders will only go to a general maximum of four and a half times the income, with a few exceptions, so asking for eight times the income will be rejected out of hand.
A good broker should be able to review your overall scenario and suggest why you may have been turned down. They should also know which lenders are not crediting with an automated system, which can help.
Finally, they can give tips and advice on how to improve a credit report so that in the future a request is more likely to be acceptable. So, before many requests are turned down, talk to a broker.
Tell them everything that happened and provide copies of your Experian and Equifax credit reports, as these are the reports almost all lenders review.
Andrew Montlake, Mortgage Broker Coreco, adds: While there is a lot of coverage around the difficulties some people may have getting a mortgage, this primarily refers to Main Street lenders. There’s a whole world of specialty lenders and smaller mortgage lenders out there who want to lend to those who may not quite fit the checkbox mentality of banks and mortgage lenders.
Andrew Montlake of Coreco Mortgage Broker
There are now a plethora of options for the self-employed, who have had mild credit issues, or have complex income or property requirements.
It’s true that accessibility testing has made it more difficult, but people shouldn’t lower their chances until they’ve spoken to a professional advisor who can talk about the wider market.
Options are available for many, you just need to know where to look.
This is Money’s Will Kirkman responds: When applying for a mortgage, it usually pays to check out different mortgage providers to make sure you get the best deal.
You can do this yourself by contacting each lender directly or you can use This is Money Mortgage Finder which allows you to search for lenders who offer Home Buyer’s Mortgage Loans.
It’s always a good idea to speak to an independent advisor when making important financial decisions.
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