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5 Factors That Affect Your Mortgage Application You Might Not Know About

MORTGAGES | 19.04.2021

When applying for a mortgage, lenders take into account more than just your income and credit rating. Spending habits such as gambling, using payday loans, and funny payment descriptions could potentially damage your chances of getting a mortgage. 

Before starting the mortgage application process, you might want to consider how your finances look on paper. Lenders have tightened their affordability criteria as a result of the pandemic, making it more of a challenge to get accepted for a mortgage. Boost your chances of securing a loan by keeping a close eye on these common spending habits: 

1. Using Joke Payment Descriptions When Sending Money

Adding a ‘funny’ description to a bank transfer with your friend might seem like a laugh at the time, but not so much when a mortgage lender spots it in your bank statements. It’s best to avoid joke payment descriptions altogether (especially when it references something illegal or untoward) to ensure your mortgage lender doesn’t raise any queries. 

2. Betting Apps 

As gambling has been made all the easier with sports betting apps, it’s important you monitor your spending to ensure it doesn’t become a cause for concern. When applying for a mortgage, if a bank or building society notices that you’re an active gambler, they may turn down your application. This only really applies if the transactions take up a significant amount of your monthly income or you’re dipping into an overdraft; the occasional bet is absolutely fine. 

3. Using Buy Now, Pay Later Schemes 

It’s become rare to find an online fashion retailer without a buy now, pay later scheme in place, allowing their customers to spread the cost of the item over several weeks interest-free. While it might be tempting to use systems such as Klarna or Clearpay, it could have an impact on your chances of mortgage acceptance. Lenders sometimes interpret it as you not having the funds to pay for low-outlay products upfront.

4. Payday Loans

Even if you repaid your payday loan in full and on time, it can still go against you when applying for a mortgage. Payday loans show the lender you’ve had moments where you have been living beyond your means. 

5. Monthly Subscriptions

Netflix, Spotify, gym memberships, app subscriptions...they’re all monthly outgoings you need to be wary of. Though they’re relatively low in comparison to your other monthly payments, subscription services can be held against your ability to afford mortgage payments. Assess your outgoings and make sure you have the funds to keep your current subscriptions - you might even be paying for something you no longer use. Looking to buy a home? For more help with your mortgage application, get in touch with one of our friendly experts here or call 0345 305 2540.
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