Navigating the world of mortgages can be a daunting task, especially for first-time buyers. However, with the right knowledge and preparation, you can significantly improve your chances of securing a mortgage. With that in mind, here are the top expert-approved strategies to help you on your journey.
Improve Your Credit Score
Your credit score is a key factor that lenders consider when deciding whether to approve your mortgage application. A high credit score indicates that you’re a reliable borrower, which can increase your chances of approval. You can improve your credit score by paying your bills on time, reducing your debt, and regularly checking your credit report for errors.
Save For A Larger Deposit
The larger your deposit, the less risk you pose to lenders. According to Which?, a deposit of at least 15% of the property’s value can significantly improve your chances of getting a mortgage. However, a deposit of 20% or more is ideal.
Maintain A Stable Employment History
As the team at Stanmore, a mortgage advisor in London, tell us, lenders prefer borrowers with a stable employment history. If you’ve been in your job for at least two years, you’re more likely to get approved for a mortgage. If you’re self-employed, you’ll need to provide at least two years’ worth of accounts to prove your income.
Limit Your Outgoings
Lenders assess your affordability by comparing your income to your outgoings. By reducing your monthly expenses, you can increase the amount you’re able to borrow. This includes cutting back on non-essential spending and paying off any outstanding debts.
Understand The Mortgage Market
The mortgage market is constantly changing due to factors such as interest rates, legislation, and economic conditions. By staying informed about these changes, you can make more informed decisions about when to apply for a mortgage. For example, the recent Stamp Duty Land Tax (SDLT) holiday in the UK (ongoing until mid 2025) has made it a favourable time for many to buy property.
Seek Professional Advice
A mortgage broker can provide valuable advice and help you find the best mortgage deal. They have access to a wide range of lenders and can negotiate on your behalf. Money Helper, a UK government initiative, recommends using a mortgage broker to improve your chances of getting a mortgage.
Consider A Joint Mortgage
If you’re finding it challenging to secure a mortgage on your own, consider a joint mortgage. This involves buying a property with a partner, friend, or family member. By combining your incomes, you can increase your borrowing power. However, it’s crucial to understand that all parties are equally responsible for the mortgage repayments.
Explore Government Schemes
The UK government offers several schemes to help first-time buyers get on the property ladder. For instance, the Help to Buy: Equity Loan scheme allowed you to borrow up to 20% (or 40% in London) of the cost of a newly built home, with just a 5% deposit. Although that has now ended (as of March 2023), the Shared To Buy scheme lets you buy a share of your home and pay rent on the remaining share.
Leverage Technology
In today’s digital age, there are numerous apps and online tools that can help you improve your mortgage prospects. For example, credit score apps can help you monitor and improve your credit rating, while budgeting apps can help you save for a larger deposit. Mortgage comparison websites can also help you find the best deals based on your circumstances.
Consider A Guarantor Mortgage
A guarantor mortgage can be a viable option if you’re struggling to get approved for a mortgage due to a low income or poor credit history. In this arrangement, a family member or close friend agrees to cover your mortgage payments if you’re unable to. This provides additional security for the lender and can increase your chances of approval. However, it’s essential that both you and your guarantor understand the financial implications of this commitment.
The Bottom Line
Securing a mortgage may seem like a complex process, but with the right preparation and advice, it’s entirely achievable. By following these expert tips, you can improve your chances of getting a mortgage and move one step closer to owning your dream home.
