How Can I Improve My Mortgage Approval Chances?

Getting approved for a mortgage can seem challenging, but by understanding what lenders look for and preparing accordingly, you can greatly enhance your chances of approval whilst also grabbing the best deal for you. Here are some common questions and helpful answers to guide you through the process.

Touchscreen Mortgage Approval

What credit score do I need to get a mortgage?

Your credit score plays a crucial role in securing a mortgage and influencing the mortgage rates you’re offered. Here’s a quick breakdown from Experian:

Excellent (961-999): Depending on your deposit, you’re likely to access the best deals

Good (881-960): Again, there is a strong likelihood you’ll access the better deals, subject to your level of deposit

Fair (721-880): Options with reasonable rates is likely

Poor (561-720): Approval still likely but with higher interest rates & fees

Very Poor (0-560): Harder to get approved, expect to pay higher interest rate and fees

Tip: To improve your mortgage chances firstly Check your credit report for errors. Then, where possible:

·       Never use PayDay Loans

·       Pay down existing debts

·       Cancel cards that you are no longer using

·       Ensure you’re on the Electoral Register and

·       Avoid making late payments before applying

A higher credit score can mean better mortgage terms and easier approval.

For more on this subject check out How to Improve Your Credit Score and 5 Tips For Securing A Mortgage With A Less-Than Perfect Credit Score.

How does my employment status affect mortgage approval?

Lenders prefer to see stable employment, usually with at least 2-3 years in the same role or industry, as it demonstrates reliability. However, a shorter employment period doesn’t automatically rule you out, with many lenders still comfortable if you’re yet to start a new job!

More lenders are now also supporting those who have been self-employed for just one year, especially if you can provide detailed financial records.

Having consistent income, even over a shorter period, can still make you a strong mortgage candidate.

Should I save for a larger deposit?

Yes, saving for a larger deposit can significantly improve your mortgage chances. It not only reduces the amount you need to borrow and is therefore less risky for the lender, it also shows lenders you’re financially disciplined. While a deposit of at least 5-10% is usually required, there's a growing number of lenders offering 100% mortgages or low-deposit options, making homeownership more accessible. However, having a larger deposit, around 20% or more, can give you an advantage in the approval process and secure you better mortgage rates and terms.

How will my existing debts affect mortgage approval?

When considering existing commitments, your debt-to-income (DTI) ratio is a key factor lenders consider. A lower DTI indicates to lenders that you manage your debts responsibly, reducing their perceived risk and increasing your chances of approval.

Lenders are generally looking for a DTI of no greater than 40%. To improve your odds, try to pay down existing debts like credit cards, personal loans, or car finance before applying. This not only lowers your DTI but also demonstrates that you’re capable of managing additional borrowing comfortably, often helping you secure better mortgage rates.

What documents should I prepare before applying for a mortgage?

Gather essential documentation, including recent pay slips, bank statements, proof of savings, identification, and details of any existing debts. Having these ready speeds up the application process and presents you as prepared and organised.

For further information on this check out What Documents Are Required For My Mortgage Application?

Does applying for many mortgages affect my credit score?

Multiple applications within a short period can impact your credit score slightly. To minimise this, consider consulting a mortgage broker or doing thorough research beforehand to apply for the best options more efficiently.

Are there additional tips to improve approval chances?

Yes. Avoid making large purchases or applying for new credit cards just before applying. Keep your bank statements free from unusual transactions. Getting pre-approved can also strengthen your position when making an offer on a property.

Summary:

Improving your mortgage approval chances comes down to managing your credit score, saving a bigger deposit, and being well-prepared with documentation. Follow these straightforward steps, and you'll be in a stronger position to secure the mortgage you need to buy your new home.

Ready to get moving?

Speak to a Mortgage Adviser Now

.

Your home may be repossessed if you do not keep up repayments on your mortgage.Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.