Boost your mortgage chances

Boost your mortgage chances

Sort your finances before you apply

Getting a mortgage can seem like climbing Everest, and the pandemic hasn't made it any easier for a lot of people, but there are ways you can improve your odds. You'll need to be as attractive as possible to lenders if you want to get the best mortgage deal – which right now can result in an ultra low mortgage rate. Here are our 18 tips on how to boost your chances of getting the deal you want. 

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  1. Don't expect every lender to fancy you

    Every lender has its own method to decide whether it wants to lend to you. If you fit a lender's criteria, you might be accepted quickly. If you're far from ideal, your chances of rejection will increase.

    But for people in the middle, it's more of a grey area and the lender's scorecard will be based on several factors, such as:

    • The size of the loan you want to take out. Are you looking to borrow £150,000, £200,000, £250,000, etc?
    • How much you've saved as a deposit. The bigger your deposit, the less of a risk you'll likely be seen as.
    • Your employment status and income. Are you a permanent or temporary member of staff, a freelancer, self-employed?
    • Your credit rating and history. More on this below in point two.
    • Your outgoings. This is how you spend your money.
    • Your existing debt. This could include credit card debt, student loan, etc.

    If you pass, it means it's more likely to lend to you but nothing is guaranteed.

    Quick question

    • The information comes from several different sources including your application form, any past accounts you've had with that lender and anything recorded on your credit file.

      Your application form

      This will have your personal details, plus information about your other credit commitments. It'll also have details about the property you want to buy.

      Go through this with a fine toothcomb. If you're applying online, double check everything you've filled in. For those applying applying over the phone, ensure that the mortgage advisor hasn't taken down any information incorrectly. One slight slip, such as a "£2,000" salary rather than a "£20,000" one, can immediately kibosh any application and possibly future ones too.

      Any past accounts you've had with that lender

      If you're applying for a mortgage with a lender that you've had dealings with in the past, for example if you've had a credit card with that lender, it'll use this information to add to what it knows about you.

      Your credit files

      The three credit reference agencies – Experian, Equifax and TransUnion – compile information, allowing them to send data on any UK individual to prospective lenders. All lenders use at least one agency when assessing your file.

      This data provided by the agencies includes court records, fraud data, and information about any credit cards, utility contracts (gas, electricity, water etc), mobile phone contracts, overdrafts, loans or bank accounts you've got.

  2. Check your credit report before the mortgage lender does

    You need to convince mortgage lenders that you've got the financial discipline required to pay back your mortgage. One way they investigate this is by searching your credit report(s) to find out if you've a good repayment history.

    Your credit report lists details from any accounts you've had open over the past six years, including:

    • Credit cards
    • Loans
    • Overdrafts
    • Mortgages
    • Some utilities

    The three credit reference agencies in the UK are Experian, Equifax and TransUnion. It used to be that checking your credit report would cost you, but these days you can do it for FREE. See how to access your Experian, Equifax and TransUnion credit reports in our Check your credit report for free guide.

    It is worth checking that each of them is up to scratch, as you don't know which one(s) your future mortgage lender will check.

    Can I get a mortgage with a bad credit score?


    Having a poor credit history might not automatically rule out your chances of getting a mortgage, but it certainly runs the risk of scuppering them. To give yourself the best chance possible of acceptance, take the time before you apply for a mortgage to get your credit report into good shape.

    For tips and help on how to bolster your credit report, see our Credit Scores guide.

    Quick questions

    • All lenders use at least one agency when assessing your file. Your credit report contains data from five main sources:
       

      • Electoral roll information. This is publicly available and contains address and residence details.

      • Court records. County court judgments (CCJs) and bankruptcies indicate if you have a history of debt problems.

      • Search, address and linked data. This includes records of other lenders that have searched your file when you've applied for credit, addresses you're linked to or other people you have a financial association with.

      • Fraud data. If you've committed a fraud (or someone has stolen your identity and committed fraud) this will be held on your file under the CIFAS section. More info below.

      • Account data. Banks, building societies, utility companies and other organisations keep details of all your payments and transactions on credit/store cards, loans, mortgages, bank accounts, energy and mobile phone contracts.

        In addition, payday loan data is normally reported, and 'doorstep lenders' are legally obliged to share the data that they hold on you. If you use Buy now, pay later, data about you from these service providers – such as missed payments – may also be shared with the agencies.

        Credit reference agencies will usually know:
        - How much you owe
        - How long you've had the relationship for
        - Details on your financial behaviour, such as late or missed payments
        - The final outcome and date of any closed financial accounts
        - Financial links with other people (such as a joint bank account or mortgage)
        - Details of any hard credit checks (eg, because you've previously applied for credit)
        - Any defaults or county court judgements in the last six years
        - Whether you're bankrupt or in a formal debt relief plan
    • There are many myths about what information is held on credit files. Don't be fooled, though. They hold an enormous amount of financial data, but there's lots they don't know about you.

      The following things are NOT listed on your report:

      • Buying habits (ie, what you tend to buy)
      • Race, religion, colour, medical history or criminal record
      • Information on relatives (unless you've a joint financial product with them)
      • Parking or driving fines
      • Salary
      • Council tax arrears
      • Savings accounts
      • Student loans (unless taken out pre-1998)
      • Old defaults or missed payments (from six+ years ago)
      • Any payment holidays approved by your lender

       

  3. Correct credit score errors pronto

    If your credit file info's wrong, you have a right to do something about it – either having the error corrected or, at the very least, having your say.

    Your first step should be to check if the error is on your credit file held with other agencies, then talking to the lender. If this doesn't work, the free Financial Ombudsman could step in and order corrections.

    Here's our step-by-step help:

    • Check your file with other agencies. See if your file with them has the same error. If you get it corrected with one agency the information should be sent to the others, but it's better to contact them yourself to ensure your file with all three – TransUnion, Equifax and Experian – have the right details.
       

    • Contact the lender. Most will have a system in place to deal with customer disputes, and if you've proof, it should be resolved quickly. Write to it, say you think the error is unfair and ask it to wipe it from your file.

      If it's a default and you're prepared to settle with your lender, either in part or in full, you could also try negotiating with it. As part of negotiations, you could make a condition of settlement that the default is wiped off your credit file. Companies can do this for disputed defaults.
       

    • Write to all three credit reference agencies. If the lender's not playing ball, write to the three credit reference agencies, and ask them to add a 'notice of correction' to your file.

      This is where you get to explain the default. You should write around 200 words that will be included on your report and explains the problem. For example, "It was a joint account and the debt was run up once I had split from my ex-husband/wife."

      This will slow future credit applications down, as most companies will look at it manually, but if the error is a substantial default, which is likely to stop you getting credit, that's usually not a problem.

    • If the lender won't help, complain to the Ombudsman. You have the right to go to the free, independent Financial Ombudsman Service if you believe the error is unfair and writing to the lender hasn't worked. It's the official body for settling disputes between individuals and financial companies, acting as an impartial adjudicator.

      It can rule both that the debt is unfair (if it is) and that the default can be wiped.
  4. Check if financial support during the pandemic could dent your mortgage chances

    At the start of the pandemic, lenders and the Government introduced various support measures for those struggling financially, such as the furlough scheme and payment holidays on credit cards, loans, payday loans, buy now, pay later products and insurance premiums. 

    Yet if you're using one of these schemes – or you were but it has since closed, such as furlough – this can actually dent your chances of getting a mortgage. In brief:

    • Lenders can find out about payment holidays and other forms of 'forbearance'. While a coronavirus-related payment holiday taken out by 31 March shouldn't have appeared on your credit file, a mortgage lender could STILL find out about it in other ways. For example, a lender could see your outstanding credit card balance isn't going down.

      Any 'forbearance' offered by a lender after 31 March (or after a six-month payment holiday, taken out by 31 March, has ended) will definitely go onto your credit file – for example, where you agree to have your mortgage term extended or reduce your mortgage payments.

      So if you're planning to apply for a mortgage in the future, think very carefully about whether you need such support. More info on lender forbearance in our Coronavirus Finance & Bills guide.

    • Past use of furlough or self-employed income support scheme (SEISS) grants could count against you. While the furlough scheme is now closed, if you were furloughed at any point in the past, a lender will likely want to see proof that you're now back at work. Similarly, if you're self-employed and had been claiming the SEISS grants whilst they were available, a lender will probably want to see evidence that your business is now able to operate without them.. 

      If you're struggling to get a mortgage as a result of previously being furloughed or reliant on SEISS grants, speak to a mortgage broker, as they'll be able to advise you as to which lenders could help.

      For those struggling to remortgage, another option is to ask your existing lender if you could switch to a different mortgage deal with it, something known as a product transfer. An affordability test isn't always required with a product transfer, plus there's typically no or lower fees, and less paperwork involved. 
  5. Register to vote or your chances might be scuppered

    This is a potential dealbreaker. While you can have a perfect credit score without being on the electoral roll, it's very difficult to get a mortgage without it. Lenders use electoral roll data in identity checks (to ensure you are who you say you are, and live where you say you live and that you're not laundering money).

    Your credit file will say if you're on the electoral roll or not, but you can also check with your local council. Do this as early as possible. While you can usually be added within a month, in late summer and early autumn it could take longer.

    If you're not on it, you can register on the electoral roll for free. If you're not a UK, Irish or EU national and thus can't get on the electoral roll to vote, then you can put a notice of correction on your file, saying you have other proofs of address and ID you can offer lenders (assuming that you do).

  6. Delink from ex partners or flatmates to stop their credit history wrecking your chances

    Coffee in cups

    If you're financially linked to someone else (which only happens when you apply for joint credit, such as a bank account, mortgage or loan) but you're now separated or have nothing to do with them, then de-link yourself.

    If not, any late payments or misdemeanour they've committed will reflect badly on you. Write to the credit agencies and ask for a notice of 'disassociation'.

    You could still be linked to old flatmates if you had a joint bank account for bills, so it's worth checking that their credit history isn't affecting yours. If it is, de-link yourself quickly.

    Even if the person you're linked to has a good history now, you still risk problems in future if they miss payments. The Credit Scores guide has full details of what to do.

  7. Carefully manage your available credit

    This is all about how much credit you have available to spend on credit cards and overdrafts. It's the difference between your combined debit balances on your cards and bank accounts and your combined credit limits/overdraft limit.

    You need to strike a balance between not having too much – as lenders may think you could rack up more debt by spending it all – and not getting too close to your limits, which makes it seem you're at the edge of your finances. Here's what credit agency Experian says:

    • If you have debts, lenders prefer that they make up less than half of your available credit. To be really safe, try to keep any debts equivalent to 25% of your available credit. So if you've a combined limit of £10,000, lenders rather you use less than £5,000 of it, but ideally sticking nearer to the £2,500 mark.

    • If you are using a decent proportion of your available credit, avoid lowering your limits so you're suddenly close to the edge. Similarly, don't have tens of thousands of pounds of available credit unnecessarily – new lenders get twitchy that you could suddenly be far more indebted than you currently are.

    This is an art, not a science, and all lenders' views of how much credit you 'should' have differ. Try to average around 25% of your available credit, but if you need to use more then definitely keep it below 50% in all cases. Of course, if you can pay off debt, you should do so.

  8. Close old, inactive accounts – they can kill your application

    If you're not using an account, it may be worth closing it. Leaving it open might be a fraud risk, and it could display out-of-date details.

    Having said that, when applying for a mortgage, longer, stable credit relationships are a positive. So, if you've two credit cards, one recently opened and an older one, it's probably not worth closing the older one before the mortgage application as you could lose the credit score boost it gives you.

    See the Should I Cancel? section of our Credit Scores guide for full information on why you should (and shouldn't) close old accounts. Remembered, if you are closing an account, just cutting up the card isn't good enough – you must tell the bank you want it closed.

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  9. Always pay ALL your bills on time

    It's obvious – so do it.

    All missed payments count against you on your credit file, so it's vital to keep up all repayments on ALL your outgoings.

    A missed-payment default count against you for at least a year, and they'll stay on your file for the next six years. Miss just one mobile phone payment and it could be the difference between getting a mortgage and not.

    Where possible, set up a direct debit to make sure payments are made on time.

  10. Don't apply for other credit shortly before a mortgage

    Try to avoid applying for credit in the three months before getting a mortgage – it could hinder your score and lead to rejection. Some recommend at least a six-month gap, to be absolutely safe. The Credit Scores guide has full info.

    This is because lenders will search your credit file every time you apply for a loan, credit card, overdraft, and increasingly mobile phone or utility contracts too. This search, known as a 'hard' credit check', is registered on your file even if you don't take out the contract.

    The more searches you have in a short time, the less likely you are to be granted credit, as you could be viewed as desperately seeking borrowing.

    If you NEED to apply for credit, it's unlikely that one application will hurt all that much, provided it's affordable. BUT – if it's a payday loan, some lenders will decline you for a mortgage if you've had one in the past year. See our Payday Loans guide for more info.

  11. Cut back on spending before you make your mortgage move

    Lenders are likely to want to see your bank statements to get a good idea about your outgoings. One of the reasons is that, since 2014, mortgage lenders have been required to 'stress test' borrowers.

    This isn't hooking you up to wires checking if you're telling the truth – it's checking you'd still be able to afford your mortgage if rates went up to 6% or even 7%.

    The lender may ask to see your latest three months of bank statements before you apply. It will use these to check your income matches what's on your payslips and examine your recent spending.

    It's worth tightening your belt in the months before you apply. Don't go getting a round in for everyone in the local, online betting or spending every Saturday night in a casino – especially if you're applying for a large mortgage that will put some pressure on your monthly budget.

    It also makes sense to live a little frugally in the run-up to buying your first home. Moving costs are high, so every penny you save means a bigger budget to meet unexpected costs. See our How to Budget guide for help and tips on sticking to a spending regime.

  12. Stay out of your overdraft

    If you're constantly in your overdraft, this could be seen as living close to the edge of your finances, so avoid it if possible. In fact, some lenders may not tolerate you being in your overdraft at all in the last three months.

    And if you've no choice but to be in your overdraft, should you really be getting a mortgage?

    To get a cheaper overdraft (if you really need it) see our Best Bank Accounts guide, but always budget to clear the debt as soon as possible.

  13. Make paying your rent boost your credit score

    Do you always pay your rent on time? If so, there are free schemes that private renters and social housing tenants can use to boost their credit ratings.

    Typically you'll need to be signed up to these schemes for at least six weeks for your rent payments to actually start appearing on your credit file, but the longer you stay signed up for, the bigger the impact paying your rent on time should have on your file.

    Some users of these schemes have reported seeing significant improvements in their credit scores, including one person who reported a 250-point jump over four months. It's hard though to say what the average improvement to a person's score is as it'll depend on your personal circumstances.

    It's worth noting that the only way you'll potentially reap the benefits of this is if you always pay your rent on time. Miss a payment and it'll show up in your file and could be off-putting to lenders if/when you apply for a mortgage.

    Read more about these schemes in our Credit Scores guide.

  14. Put £100 more than you have to on your deposit - it can get you a better rate and easier acceptance

    It's well known that mortgages typically get cheaper at 90%, 80%, 75% and 60% loan-to-value (or put another way, if you've got a 10%, 20%, 25% or 40% deposit). So obviously if you're nearing a border, it's worth seeing if you can push to it to reduce the interest rate you'll pay.

    For example, you'd normally get a much better interest rate if you applied for an 80% mortgage (with a 20% deposit) than if you applied for an 81% mortgage (with a 19% deposit). For more info on why your loan-to-value band is important and how much you can save by putting down a bigger deposit, see our How much can I borrow? guide.

    What's less known though is if you push £100ish further beyond that band (eg, just below a 90% or 80% mortgage), this can actually increase your chances of acceptance, as it no longer looks to mortgage underwriters like you're scraping to get to the mortgage band limit.

    Mortgage broker Ray Boulger of John Charcol tells us that in some cases, even a fiver more can make a difference. This'll likely be the case with high loan-to-values and bigger lenders that process mortgage applications using computer algorithms, and where your credit score is touch and go. As it can never harm, you may as well try.

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  15. Sort your paperwork to speed things up

    Lenders need proof of your income before they can offer mortgages, so it makes sense to get your paperwork together in advance. Sending all the paperwork in one batch speeds up the process as it reduces the chances of your application being reviewed by more people.

    If your lender won't accept PDFs, uploads or printed internet bank statements, you may need your bank(s) to send you original copies. Ask for these a few weeks in advance in case you need to wait for the originals to arrive.

    Your lender may want to see any or all of:

    • Your last three months' bank statements
    • Your last three months' payslips
    • Proof of bonuses/commission 
    • Your latest P60 tax form (showing income and tax paid from each tax year)
    • Your last three years' accounts or tax returns
    • Proof of deposits (eg, savings account statements)
    • ID documents (usually a passport)
    • Proof of address (eg, utility bills or credit card bills)
    • A gift letter. If you're getting deposit help, the lender needs to know it is a gift (not a loan), and that the giver won't part own the home.
  16. Avoid delays – fill out the application form correctly

    Here are our top five tips for filling in the paperwork or online application. Even if you end up getting a broker to help you, it’s normal for you to be asked to check it first so make sure you:

    DO state your income exactly. Don’t round up.

    DO give your FULL NAME – even middle names are necessary.

    DO declare ALL your debts. The lender will find them anyway and withholding the info can mean a quick decline.

    DO get your three-year address history exactly right, including postcodes.

    DO give honest answers when asked about how much you spend.

  17. Test drive your mortgage chances

    Once you've done all the steps above, your finances should be in great shape. To test this, a mortgage agreement in principle (AIP), offered by many lenders, is the acid test.

    It's a conditional offer saying you may be accepted, based on a quick check of your income and, probably, your credit file. However, it offers no guarantees and it's not compulsory. But for first-time buyers especially, it boosts estate agents' or sellers' confidence that you'll be able to complete the sale, so may up your chances of having an offer accepted. Some worried sellers might only accept viewings where you've had a mortgage AIP.

    It's worth benchmarking a top deal with our Mortgage Best Buys tool, and asking the lender (or your broker) to see if you pass the checks for their AIP. Don't worry – just as it doesn't tie them in to lending to you, it doesn't mean you have to borrow from that lender if you spot a better deal further down the line.

    Beware – too many of these checks in a short space of time could harm your credit rating if the lender does a credit check and marks it on your file. This could damage your mortgage application later on.

    Some lenders offer a 'soft' search option, which won't be visible to other lenders (but will show up for you). Find out from the lender which it is before agreeing to one.

  18. Rejected? Stop before you make another move

    If you're rejected – FREEZE! Don't automatically apply again with a different lender. Too many applications will mess up your credit score, so don't do it. Instead, the first thing to do is to check your credit file again. Could you have missed something?

    At all costs, avoid the rejection spiral. The nightmare example works like this:

    • You apply
    • You get rejected (sometimes falsely, due to an error)
    • You apply elsewhere
    • You get rejected again

    This continues, until finally you check your files and get the error corrected. So...

    • You apply again
    • You're rejected because of recent 'searches'

    If you're rejected once, immediately go to the top of this guide and follow the steps we've set out, or you may mess up your score as more applications mean more searches, which will compound the problem.

    If you haven't missed anything and your credit file's still looking good, it could just be that the lender you applied to had its own reason for turning you down. It's worth asking the lender why.

    It should indicate to you the main reason you were turned down – and will tell you if that was your credit file.

    Ready to get a mortgage?

    We've lots more guides, tools and tips to help…

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