According to a recent analysis from Experian, only 3.5% of borrowers are eligible for all the mortgage deals currently on the market.
Around a third of customers end up getting declined by lenders on average, as they fail to meet their full lending criteria. Many find that they are eligible for a mortgage with at least one lender, but aren’t able to borrow the amount they want.
Of the borrowers who use pre-qualification websites to find a mortgage, 22% actually meet the initial qualifying criteria for every market lender. However, this figure falls to the 3.5% mark once they have gone through an affordability check for their desired loan, along with an eligibility check.
27% of borrowers are eligible for a mortgage deal, however this often ends up being for a reduced amount, so that they meet the affordability requirements of the lender. This figure increases to 31% for customers seeking to remortgage with additional borrowing requirements.
How can you increase your chances of being accepted?
If you’re concerned about being declined for a mortgage deal by lenders, there are things you can do to strengthen your position, and increase the chances of being accepted.
- Checking your credit report - Lenders will review this detailed report of your credit history in order to see whether you qualify for a loan and at what rate. There’s nothing stopping you from checking over this yourself first. This way you can see what the creditors will see and know where to make improvements.
- Fixing any mistakes - Speaking of improvements, once you’ve checked your report, check closely for mistakes that could negatively affect your credit. For example, debts that have been paid, information that's not yours or out of date, and incorrect notations for closed accounts. Check your report at least 6 months before applying for a mortgage, so that you have time to fix any mistakes.
- Improving your credit score - Your credit score is used by lenders to evaluate your credit risk and determine how likely you are to make timely loan repayments. Generally, the higher your score the better mortgage rate you can get. So, doing what you can to increase your score can help. Such as reducing the amount of debt you owe, paying off any debts, paying bills on time and keeping your credit-card and revolving credit balances low.
- Lowering your debt-to-income ratio - Lenders will also look at this to measure your ability to manage payments, and determine how much you can afford. This ratio is calculated by dividing your total recurring monthly debt by your gross monthly income, expressed as a percentage. Lowering this percentage is the aim, and one of the easiest ways to do this is to simply buy less per month. Take a look at where your money goes each month, and you'll soon see where you can make savings.
- Having a bigger deposit - Of course, having a larger mortgage deposit will always increase the odds of you your application being successful. It will also open the door to better mortgage deals with preferable rates. You usually need a minimum of 5% of the property's purchase price for a deposit, but you can potentially qualify for a 100% mortgage, if your family is in a position to act as guarantors.
It doesn’t matter whether you’re a first-time buyer looking into your eligibility, or you’re already a homeowner considering a remortgage; getting the help of a professional mortgage broker can really increase your chances of success. At TaylorMade, our experts can guide you through the entire mortgage process, helping you with every aspect of your financial journey; from application to completion.
We compare hundreds of mortgage deals across the market, highlighting the ones that suit you and your individual circumstances the best. Let us take as much of the stress away as possible - Please, get in touch with us today on 0345 305 2540 or at info@taylormade-finance.co.uk
