How to get a mortgage if you’re struggling
There are many reasons why you might struggle to have a mortgage approved. Find out what you can do to improve your chances if you’re having trouble getting a mortgage.
- Bad credit score?
- Lower income?
- Small deposit?
- Living in the UK for less than three years?
Bad credit score?
Your credit report is a record of your financial history, including utilities and credit card payments, and any missed payments. This makes up the basis of your credit score, but there are many other factors that could affect your overall score.
Lenders use this to decide how much of a risk you are and if you should be approved for a mortgage.
You can get an idea of your report before applying for a mortgage by contacting the main credit reference agencies:
Any mistakes on your credit report should be corrected before approaching a lender for a mortgage.
There are a number of factors that could count against you, such as:
- missed or late credit repayments
- County Court Judgements against you for non-payment of bills
- a lack of financial history.
Even if your score is excellent there’s no guarantee that you’ll be given a mortgage. Each lender will have its own criteria for approving and declining applications.
There are many ways to boost your credit rating before you apply for a mortgage.
Lenders will look at how affordable your mortgage payments will be before granting you a loan, so you may struggle to find a mortgage with a low income.
They’ll examine your total budget and the size of the mortgage you want, to check if your income could comfortably cover the repayments, your bills and your living costs.
They’ll also look at whether you will be able to make repayments if your personal circumstances were to change or interest rates were to rise. But all is not lost if your income looks stretched.
Use our Mortgage affordability calculator to help you estimate how much you can afford to borrow to buy a home.
You’ll need to have saved a deposit of at least 5% of the price of your new home.
The higher the deposit, the better your chance of getting a mortgage and the lower the interest rate will be.
It’s wise to start saving as early in the process as you can. Read our guide on How to set a savings goal.
Choosing a mortgage where you can get help with the deposit, or where the required deposit is smaller than average, means you can get onto the property ladder sooner. Government schemes such as Help to Buy help those who have at least a 5% deposit to buy their own home.
If you’re self-employed you might find it harder to get a mortgage.
You’ll have to prove your income by showing the lender your business accounts, signed off by a chartered accountant, and your tax returns over a two or three year period.
Lenders may also ask for your business projections to reassure themselves that your earnings will continue to be at the same level or higher.
It may help to take advice from a specialist.
Living in the UK for less than three years?
It’s difficult to find anyone who will give you a mortgage if you have been living in the UK for less than three years.
Lenders will want a record of your earnings, bank account and home address for at least two years and will check your visa and employment contract.
If this applies to you, speak to an independent mortgage adviser who will know if any lenders will consider your application.
Find an independent mortgage adviser at unbiased.co.uk.
If you’re unsuccessful, look into applying for a mortgage from a lender based in the country you were living in before you moved to the UK.