Let’s face it; despite more homes being built, getting a mortgage is decidedly more difficult than it was even just a year ago.  The pandemic has upset global markets and banks are responding by putting in tougher measures and even heading into previously uncharted financial territory.  And it is potential buyers who are feeling the effects of this.

Banks are trying to minimise their risk by tightening rules on lending and have even started routinely withdrawing deals when they feel that the situation isn’t in their favour.  If you are a potential buyer with an unstable – or even slightly shaky – financial situation even a pre-approved offer might be subject to re-approval and run the risk of having your offer completely removed. Banks are worried, and they are passing on their concerns to their customers.

These self-preservation moves could leave thousands of borrowers – specifically the self-employed and those with complex circumstances – much poorer in terms of the choice of mortgages available to them and see a decline in offers being produced to them.  This is becoming a particular issue for first time buyers and those with no real credit history.  With defaults on the rise and forward projections predicting that the situation isn’t lily to ease for what could be a significant period of time, if there is even a glimmer of uncertainty, then an offer may be withdraw, despite being initially awarded.

So, what can those with less than exemplary credit histories do to help them get on the good side of their lender and secure the mortgage that they so desperately want?

• Maximise your deposit.  Lenders start to calm when they see that you are showing commitment by adding a large slice of the purchase cost themselves, and with some lenders only going as far as 60% mortgages, you would do well to maximise your input.
• Prepare your documentation.  Make sure that you have a strong paper trail that shows all of your information in an easy to digest way.  In this way, you can maximise their understanding and potential for lending you the most.  Let’s make no mistake, banks do want to lend, but they want to ensure that thy do so at the minimum of risk.
• Declare all self-employed earnings.  You need to show how viable you and your earnings are, so you need to declare everything, so that the bank is more comfortable in lending to you. If you are self-employed, you will need an SA302 (also known as a Tax Calculation) relating to the last two to three years, from HMRC, or your full accounts for the last two/three years at the very minimum.  Make sure that you can supply these and without any unexplainable gaps in them.
• Use a broker. You can maximise your chances of finding the right mortgage product by going through a broker.  A broker can do all the background work and make sure that everything is in order prior to the commencement of any physical application

If you are looking for a new mortgage, or simply want to assess your viability, come and chat to use at Grange Mortgages and see how we can help you.