By Paul Coss, Co-Founder and Specialist Mortgage Broker at Haysto
According to recent data, the last year has seen a record number of mortgage applications approved, despite many people losing their jobs or furloughed.
However, despite the 12 year high, almost half of first-time buyers faced a mortgage rejection last year, with little to no explanation of why.
Here, Co-Founder and Specialist Mortgage Broker Paul Coss from Haysto lifts the lid on some surprising lifestyle choices that could be to blame.
Gambling
Largely speaking, gambling and mortgages do not mix well. When taking out a mortgage, if a bank or building society sees that you’re an active gambler, this could go against your application and result in rejection.
While lenders don’t necessary care what you spend your money on, their primary concerns are to see if you can manage your finances and whether or not you’re getting into to debt to fund your gambling.
If you’re worried your gambling may affect your chances, speak to a mortgage broker to see what your options are.
Buy Now Pay Later Schemes
Payment schemes like Klarna, while they may seem attractive for reducing the initial costs of purchases, there are fears they’re leading many consumers unknowingly into debt and a review of the unsecured credit market is currently in play.
When applying for a mortgage, lenders take into account all credit commitments and activity, so any additional finance options that show you owe money to external lenders
can put you at a disadvantage.
Ideally, the best advice would be to avoid these until your application is accepted to maximise your chances.
Maternity Leave
If you and your partner are considering starting a family, expecting a little one or have recently welcomed a new baby, different lenders will treat you differently depending on your circumstances and plans for the very near future.
Emphasis will be placed on the income to be received during maternity leave, potential childcare costs, the terms upon which you will be returning to work and so on. Every lender does it differently.
If this is you, seek advice from a specialist mortgage broker to ensure you are pointed in the right direction.
Self-employment
Getting a mortgage when self-employed can be more complex due to the unpredictability of monthly income, with many lenders wanting to see up to three years’ worth of accounts before they consider you for a mortgage.
However, it’s not impossible as some may lead you to believe. Look to speak to a mortgage broker that specialises in self-employment mortgages as they can help find lenders and products that are best suited to your situation.
No credit history
If you think that having no credit is beneficial, think again. By having no history of credit, lenders will see you as a greater risk as they have no prior information about your ability to borrow money or whether you are reliable with repayments.
Building your credit file is easily done and any amount can help with your application.
Negative credit score
On the other hand, your score can be affected negatively if you’re spending too much of your available credit.
Lenders may consider this when they’re assessing your creditworthiness and ability to pay back credit.
Other factors that can affect your credit score negatively are if you miss or make a late payment, default on a commitment or have a CCJ (Count Court Judgement). If lenders see any of these, it will have a negative impact and it’s likely they will be less willing to lend to you.
By bringing your debt under control and managing your finances very carefully, it will help you rebuild your score.
Electoral roll
Regardless if you vote or not, not being on the electoral register can slow down your mortgage application. Lenders use it to identify who you are quickly and without this information, they may require additional ID checks.
If you’ve recently moved and not updated your details on the electoral roll, this can also impact the result of your application. So make sure you it’s up-to-date before you apply.
Jokey payment references
Although you may find writing a rude caption as your payment reference when sending money to your mates is an innocent joke, it could cause issues later down the line.
Lenders comb through potentially up to six months’ worth of bank statements when you apply, so anything that could make you look irresponsible could damage your chances.
Try and keep your references clean and informative so that there isn’t any confusion or cause for concern.