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How to increase your chances of getting a mortgage in the UK? 8 ways.

Dlaczego nie mogę dostać kredytu w UK

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In today’s article, you will learn how to increase your chances for getting a mortgage in the UK successfully. Although many of our clients don’t struggle with this, it’s worth reading these tips to save yourself stress. We warmly invite you to read on.

How to increase your chances of getting a mortgage in the UK? 8 ways

What makes me unable to get a mortgage in the UK?

Credit score

One of the most common reasons behind a bank’s refusal is your credit score. This is a rating score that determines your chances of repaying a debt. The algorithms that determine your credit score use data that relates to all your past loans and debts. On-time repayments of bills, loans, subscriptions or rejected credit applications are analysed, as well as many other, minor factors. If your credit score is low, the bank may not agree to lend you money, and even if it does, the terms of the offer may not be favourable.

In the article How to improve your credit score, we wrote a little more about this complex issue, so if you want to know more, we invite you to read on. Money Helper will be of great value.

Appropriate bank

There are truly many financial institutions in the UK market. In addition to the giants such as HSBC and Barclays, there are many smaller banks and while you can never say ‘this bank will give you the best mortgage in the UK’ or ‘this institution always has the most attractive offer’, it is worth doing extensive research and getting to know the whole market.

Both in the blog and in our consultations with clients, we emphasise that the answer to the question of which bank is the easiest to get a loan from is never simple. To choose the most convenient mortgage in the UK you have two options:

  • Check independently the offers that are available to consumers online, which will be free and slow.
  • Use a mortgage adviser, such as Extend Finance, who will not only present you with wide range of offers but also take responsibility for their advice.

The differences between banks are due to several factors. Firstly, each company has its own policy and evaluates its customers differently. Secondly, as we mentioned earlier, to get a mortgage in the UK you need to have a certain credit score and this is provided by multiple different agencies. Not all banks use i.e. Equifax, which means your score will vary. If you want to check which credit scoring agency rates you best, you can do this using a report generated by Checkmyfile.

Credit history

Another important factor is your credit history, which can both work in your favour and against you. Banks collect information on past borrowing and if you have paid back on time so far, you will gain credibility. On the other hand, if you have been late with your repayments, a mortgage in the UK could be difficult for you to get.

If you’re just planning to buy a property in the UK, it’s worth considering small instalment purchases to build up a good history in the eyes of the bank. Of course, it’s worth doing this sensibly, as the recent rise of interest rates has made borrowing costs expensive. Rather than raising the cost of your purchases unnecessarily, it’s better to save money for a deposit, as the lower the LTV (loan to value) of your loan, the lower the APRC will be.

Source of income

Banks pay attention to where your income comes from. You can take out a mortgage in the UK whether you are self-employed, working as a salaried employee or the CEO of a company, but the terms of the offer will be very different.

Those on a zero-hours contract, self-employed or working through an employment agency may find it more challenging as the bank will require prove of a reliable income, so the risk is greater. But getting a mortgage is certainly not impossible.

During the application process, you will be asked to provide payslips. Some people may be tempted to artificially inflate their creditworthiness, for example with a temporary pay rise. We strongly advise against this – firstly, it is illegal, and secondly, in the event of a rate hike, your loan instalment may end up being too high.

Finally, we return again to the subject of choosing a bank. Each company places different conditions on its customers and if, as a small business owner, you want to get a mortgage in the UK, it’s worth knowing where to go. You will definitely increase your chances if you enlist the help of a broker.

Source: Moneyfacts

Residence period

To get a mortgage in the UK, as a general rule you must have lived here for a minimum of 3 years. Of course, there are some banks that make exceptions to this rule and will confirm an application even for entirely new UK residents, but these are exceptions.

When obtaining a mortgage, you will most likely be asked for your residential addresses for the last 36 months. Banks that do not have such restrictions most likely will offer more expensive financial products.

Electoral Roll

The Electoral Roll is a list of people eligible to vote in UK elections. Registering on the roll is not only free and fairly simple, but also very useful, as it significantly increases your chances when applying for a mortgage in the UK. This is primarily due to the informative function of the Electoral Roll – banks can use it to verify all your residential addresses. If you are planning to take out a mortgage in the UK, be sure to register with the Electoral Roll and update your details regularly.

Source: Experian

Amount of credit

The most you can borrow is usually capped at four-and-a-half times of your annual income. As with almost everything, there are exceptions here too and sometimes it is possible to take out a mortgage in the UK for a little bit more, but let’s highlight, a little bit. If you fancy a £600,000 house, you won’t be able to buy it with a standard deposit while earning £60,000 a year.

The creditworthiness problem can be solved in three ways:

  • by choosing a cheaper property
  • increasing your earnings
  • buying a property with someone, such as a partner.

For more information, see the article How much you need to earn to get a mortgage in the UK.

Source: Experian

High debt

When applying for a mortgage in the UK, it is important to analyse your debts beforehand. If you have taken out a short-term loan, a cash loan or run up credit card debt, many banks may reject your application. In such a situation, you may be left with no choice but to pay off all your debts and only then apply for a mortgage.

How to increase your chances of getting a mortgage in the UK? Credit cards

If you’re struggling to find the right mortgage in England, then enlist the help of an experienced mortgage broker. Here at Extend Finance, we offer mortgage matching assistance to people who are struggling to get a mortgage. We pinpoint the reasons why you are not getting a loan, advise you on what to do to get one quickly, as well as recommending proven banks.

Summary

  • Before you apply for credit, pay off your debts
  • Signing up for the Electoral Roll is an easy and effective way to increase your chances when applying
  • A significant number of applications are rejected because of a low credit score
  • During the mortgage process, most banks require bank statements, documents proving your residential address and will check your credit history
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Our team is here to assist you. Contact us by completing the form below.

Think carefully about securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services and some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts
secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services are not regulated by the Financial Conduct Authority.

Extend Finance nor The Right Mortgage Limited can’t provide advice regarding Personal Pensions, Pension planning or investment planning advice. You must seek independent financial advice from a suitably qualified professional financial adviser who may charge you for advice.

Wills, Will writing, Trusts and Trust planning are not regulated by the Financial Conduct Authority.

* We will receive a small fee from CheckMyFile for any referrals.

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