How to get a mortgage if you’re struggling

There are many reasons why you might struggle to have a mortgage approved. Find out what you can do to improve your chances if you’re having trouble getting a mortgage.

Bad credit score?

Your credit report is a record of your financial history, including:

  • Utilities
  • Credit card payments
  • Any missed payments

Use our Mortgage affordability calculator to estimate how much you can afford to borrow to buy a home.

This makes up the basis of your credit score, but there are many other factors that could affect your overall score.

Lenders use this to decide how much of a risk you are and if you should be approved for a mortgage.

You can get an idea of your report before applying for a mortgage by contacting the main credit reference agencies:

Any mistakes on your credit report should be corrected before approaching a lender for a mortgage.

Need someone to talk to about your finances?

If you’re struggling with money, you can talk to someone today, online, by phone or face to face. We have specially trained advisers who can help you start sorting out your financial problems.

Find free, confidential advice now using our free debt advice locator tool.

There are a number of factors that could count against you, such as:

  • A lack of financial history
  • Missed or late credit repayments
  • County Court Judgements against you for non-payment of bills

Even if your score is excellent there’s no guarantee that you’ll be given a mortgage.

Each lender will have its own criteria for approving and declining applications.

There are many ways to boost your credit rating before you apply for a mortgage.

Lower income?

Lenders will look at how affordable your mortgage payments will be before granting you a loan, so you might struggle to find a mortgage with a low income.

They’ll examine your total budget and the size of the mortgage you want, to check if your income could comfortably cover:

  • Your bills
  • Your living costs, and
  • The Mortgage repayments

They’ll also look at whether you’ll be able to make repayments if your personal circumstances were to change or interest rates were to rise.

But all is not lost if your income looks stretched.

There are various schemes you can look into, including Help to Buy, shared ownership, Right to Buy and others.

Small deposit?

You’ll need to have saved a deposit of at least 5% of the price of your new home.

The higher the deposit, the better your chance of getting a mortgage and the lower the interest rate will be.

It’s wise to start saving as early in the process as you can.

Choosing a mortgage where you can get help with the deposit, or where the required deposit is smaller than average, means you can get onto the property ladder sooner.

Government schemes such as Help to Buy help those who have at least a 5% deposit to buy their own home.

Self-employed?

If you’re self-employed you might find it harder to get a mortgage.

You’ll have to prove your income by showing the lender your business accounts, signed off by a chartered accountant, and your tax returns over a two or three year period.

Lenders might also ask for your business projections to reassure themselves that your earnings will continue to be at the same level or higher.

It might help to take advice from a specialist.

Find an independent mortgage adviser at unbiased.co.uk.

Lived in the UK for less than three years?

It’s difficult to find anyone who will give you a mortgage if you have been living in the UK for less than three years.

Lenders will want a record of your:

  • Earnings
  • Bank account
  • Home address

For at least two years and will check your visa and employment contract.

If this applies to you, speak to an independent mortgage adviser who will know if any lenders will consider your application.

If you’re unsuccessful, look into applying for a mortgage from a lender based in the country you were living in before you moved to the UK.

Find an independent mortgage adviser at unbiased.co.uk.

Your next step

This article is provided by the Money Advice Service.

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