7 ways to improve your chances of a mortgage application being approved

11.07.2024

The UK mortgage market has experienced significant fluctuations in recent years, influenced by economic shifts, policy changes, and the lingering impacts of the COVID-19 pandemic. Prospective homebuyers and those navigating the mortgage application process have faced numerous challenges, from stricter lending criteria to processing delays.

According to the Bank of England, the total amount of new mortgages given out in early 2024 was £51.6 billion. This is 2.6% less than the previous quarter and 12% less than the same time last year.

While some factors may be out of your control, taking steps before you apply for a mortgage can help improve your chances.

Check your credit report

Lenders use your credit report to assess how likely you are to default on payments. So, it’s always worth checking your report before making any application. It can help you identify red flags that could put lenders off.

As well as looking at your overall credit score, things like defaulting on payments or using all the credit available can act as a red flag for lenders. They will also look for stability, being on the electoral roll and having accounts you’ve held long term can indicate this. Make sure you check that all your information is correct and contact the provider if you find any mistakes on your report.

If you do have negative marks on your credit report, it doesn’t mean you can’t get a mortgage. But it provides you with an opportunity to rectify them where possible or seek a specialist lender that may still approve your application.

Manage your available credit

How much of your available credit are you currently using? This will be indicated on your credit report and can affect your chance of success.

Using a high portion of available credit can indicate to lenders that you’re not living within your means or aren’t good at managing money. As a result, it can lead to rejection even if you have the savings or income to keep up with repayments. Ideally, your credit utilisation should be below 50% when applying for a mortgage. If you have the funds to do so, it’s worth paying off credit cards, loans or store cards before filling in a mortgage application.

Cut back on your spending

In addition to your credit report, lenders are likely to look at your bank statements too. While your day-to-day spending will be assessed, lenders are typically looking for how you manage your money rather than reviewing discretionary spending. That means you should make sure you stay out of your overdraft and make sure there’s always enough set aside to pay for essentials.

However, some types of spending or borrowing can negatively affect your application, such as gambling or payday loans.

Calculate affordability

Lenders must assess how affordable mortgage payments are for you as part of the application process. It’s a step you should take yourself too. It can help you understand how much lenders will realistically offer you and how it will affect your lifestyle.

A lender’s process will also include stress-testing your finances to see if you could still meet repayments if interest rates were to rise. As interest rates are currently low, they could increase. If they were to rise by 3%, would you still be able to make repayments? Understanding your affordability not only means you can apply for a mortgage with a realistic amount in mind, but it can give you confidence in your financial future too.

Get your paperwork in order

The above research highlighted that even those that eventually were approved faced difficulties. Getting all your paperwork in order now can help make the process quicker and smoother.

You’ll need to provide proof of your address and identity, as well as payslips and bank statements, usually covering three months if you’re employed. If you’re self-employed, you’ll usually need to show two- or three-years’ worth of accounts.

Understand a lender’s criteria

All lenders have lending criteria, but these aren’t all the same. Understanding what a lender is looking for means you can apply to those lenders that are most likely to say ‘yes’.

The mortgage market is large and includes many lenders that don’t have a high street presence. As a result, knowing where you should be looking can be difficult. This is where a mortgage adviser can help you. We’re here to help you understand which lenders suit your situation and guide you throughout the process. Selecting the most suitable lender from the outset can speed up buying your home and means that rejection is less likely.

Get a mortgage in principle

A mortgage in principle doesn’t guarantee that your application will be successful. But it is a useful indication and gives you an idea of how much you can borrow. This should be a step you take before you start looking at potential homes. It can mean you’re able to confidently put an offer forward when you do find the most suitable property.

Please note:

Your home or property may be repossessed if you do not keep up repayments on a mortgage or other loans secured against it.

There will be a fee for mortgage advice which will depend on the amount you are looking to borrow, your requirements and circumstances.

Get in touch

If you’re ready to apply for a mortgage, whether you’re a first-time buyer or looking to expand your property portfolio, we’re here to help throughout. Please get in touch on 0330 332 7866 or email advise-me@fosterdenovo.com to talk to one of our team about your mortgage application.