From innocent mistakes to completely unanticipated problems, many factors can affect your mortgage application. More and more borrowers are finding out how seemingly minor details are costing them their mortgages.
We have rounded up a mixture of common and random stumbling blocks to help make your mortgage application go more smoothly.
1. Bad Credit Score
It is no surprise that having an impaired credit history will most likely have an impact on your mortgage application.
A bad credit score essentially means that you are a high-risk borrower. You may have a history of late payments, but there are also other factors that could have contributed to a bad rating. For example, you may have made a bad decision in choosing what credit cards are right for you, declared bankruptcy or even paid the minimum amount on your credit card each month.
In general, the better your score the more eligible you are for lower interest rates.
2. Having No Credit History
When you have no credit history, you have nothing on your credit report. This means that banks or mortgage lenders can’t really find patterns in your behaviour because you haven’t borrowed anything before.
Your mortgage lender needs to feel confident that you will be able to make your mortgage repayments.
This is why it’s highly advised you build up a good credit report before putting forward you mortgage application.
3. Being Self-Employed
Many mortgage lenders do have packages designed specifically for self-employed individuals.
The problem lies with how soon you apply for your mortgage. Most lenders require at least 2 or 3 years of accounts and some self-employed people cannot provide this. Before the financial crisis in 2007-2008, self-employed workers simply told the mortgage lender what they earned.
Now, the more accounts you show the better. This is because lenders will base their calculations on your average profit in the past few years.
More specifically, Japanese knotweed. It is notoriously known as the plant that kills mortgages. Its growth is so aggressive that mortgage lenders have been reluctant to lend on a property with the plant.
The shrub can open cracks in foundations, brick walls and damage drainage works. Even after the situation has been treated (which can take up to two years), there is still a risk that it grows like before if you awaken the original root. Meaning, it will be difficult to build home extensions or even a conservatory.
5. Changing Your Name After Marriage
This won’t necessarily affect your application. However, if you are not on the electoral roll (because you haven’t registered yourself with your new married name), chances are your mortgage application might get rejected.