How to improve your chances of passing a mortgage affordability assessment

Getting on the housing ladder can feel like one of the hardest and longest processes in the world and the cost of living crisis is probably not helping. You need to come across as attractive as possible for lenders to consider you but there are many factors that can reduce how much lenders are willing to let you borrow for your home, from debt to low household income.

So how do lenders decide whether to offer you a mortgage? 

If you’re applying for a new mortgage, remortgaging or increasing your current mortgage, lenders are required to carry out an affordability assessment. This involves a variety of checks designed to make sure you can afford to repay what you borrow. According to the Independent, some two thirds of first-time buyers are rejected for a mortgage at their initial attempt, so clearly these checks aren’t just for show. So, what can you do to boost your chances of passing an affordability assessment.

1. Demonstrate stable employment

Lenders are reluctant to offer mortgage deals to people who have recently become self-employed. Many ask for three years of accounts, although some will accept two and a few will even consider you with only one. Even simply switching from one employed position to another can affect your chances of success. Most lenders like to see that you’ve been with an employer for at least three to six months before they’ll consider you.

2. Reduce any debts

Lenders will look at your total income and then work out how much you need to maintain a basic standard of living. This will give them an idea of how much you can afford to spend on a mortgage. Reducing the amount you owe on things like credit cards and loans will increase the amount you have available and boost your chances of passing an affordability assessment.

3. Check your credit report

Before offering you a mortgage, lenders check your credit report. A poor credit history could affect the amount they’re prepared to offer or cause them to turn you away altogether. However, there are simple ways to improve your credit rating. Before applying for a mortgage, check your credit report for errors, make sure you’re registered to vote at parents addresses, avoid applying for new credit in the six months leading up to the application and make sure you’re well within any existing credit limits.

4. Get professional advice

A mortgage adviser will be able to assess your circumstances and point you in the direction of the right lenders.

Key takeaways:

Lenders like to see that you have a stable income so it’s best to avoid changing your work situation in the time leading up to a mortgage application. Reducing the amount you owe on credit cards and loans can help improve your chances of securing a good mortgage deal. Lenders will check your credit report before offering you a deal so make sure yours is up to scratch before submitting a mortgage application. Professional advice could boost your chances of passing an affordability assessment. 

 

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 15/03/2024.