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Problems Getting a Mortgage

Choosing to get your foot on the property ladder is an exciting time, and you’re probably doing all your research trying to find the perfect home. You’ve saved up a deposit, and now decided to take the plunge but one of the biggest stumbling blocks of buying your own home is securing a mortgage. With banks tightening up their lending too, it makes it even more difficult to get that all important mortgage to fund your dream home. There are lots of reasons why you may be turned down for a mortgage, but equally lots of ways you can put yourself in a better position to be offered one.

Usually mortgage providers like people with a steady income, long term job, large deposit and good credit history. If you fall outside of these basic principles you could find yourself having difficulty obtaining a mortgage. That said, many people who tick the right boxes still get turned down by the banks. If you are self-employed or have a less than average credit rating then this may go against you straight away, as you are classed as high risk. Although there are sub-prime lenders who may offer to people that mainstream lenders won’t. However their interest rates tend to be much higher, so it is a good idea to consider trying to adjust your situation in order to secure a lower interest rate mortgage with a high street bank rather than accept a mortgage with a sub-prime lender.

Your age can have a factor in whether or not you are offered a mortgage too. Even if you have a good credit history, a steady job and a good deposit you may find yourself being turned away if you are close to retirement age. If you have a poor credit history, this will always cause problems as lenders have concerns over whether you can keep up repayments or even afford repayments based on your history.

As well as lenders sometimes refusing a person due to their circumstances or credit history, many banks or mortgage providers will refuse based on the property you are asking to mortgage. If the property is in a poor state of repair or only has a few years remaining on a lease then you may be turned down and also if it is non-conventional such as a mobile home then you are likely to have difficulty. You are more likely to be accepted with a higher deposit of between 20-30% as their investment is much more secured. So if you are requesting a high value mortgage of more than 90% for example then you could be refused even if you think you can afford the repayments.

If you are self-employed it doesn’t necessarily mean you won’t be able to gain a mortgage, but you will be expected to give over your last 3 years accounts and in some cases up to 5 years. Self-employment is high risk as there is no guaranteed income in case of illness or injury for example, so lenders want to see that you have a consistent and strong income history.

by Cormac Henderson

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