As a mortgage broker in Leeds, we see many Interest-Only Mortgages come to the end of their term. In quite a few of these situations, people have struggled to pay their mortgage off in full.
Our job is to help you through these kinds of situations and give you advice on what you can do if you are faced with these problems.
Here is everything about interest-only mortgages and what you can do if you’re struggling to pay off your mortgage.
We’ll rarely find someone that has taken out an Interest-Only Mortgage on a property that they’re living in. Usually, it’s only landlords that take out Interest-Only Mortgages these days. Landlords do this so that they can maximise their profits, Interest-Only Mortgages can help them do this.
During the 1980s and ’90s, these mortgages were very popular, even amongst buyers that wanted to live inside the property that they’re buying. Their idea was that they would pay interest on the capital owed then pay the lump sum back at the end of the term.
At the time of these borrowers taking out an Interest Only Mortgage, it’s likely that they also set up an investment vehicle, this is usually a low-cost Endowment policy. This policy provided life cover to pay off the mortgage should the borrower die.
Sometimes, people were advised wrongly and wasn’t made aware of the risks involved with an Interest-Only Mortgage. There was no guarantee that the investment would mature for a big enough sum to repay the mortgage. Leading to a surge of complaints, and thousands of people received compensation if they got mis-sold.
Endowment Mortgages are more of a thing of the past. It’s been a very long time since they were popular. You’ll still find people with them though. It may be that they just haven’t got around to switching to a repayment mortgage. If you end up in this position, it can be a very worrying time because you might be worried about losing your home.
You can still take out Interest-Only Mortgages, however, you will have to pass a lot more requirements to get one. Lenders are much stricter nowadays and matching their criteria may be tricky.
If you take one out now, you may encounter problems in the future.
A borrower could be taken by surprise by their lender requesting full repayment of the balance. This may happen if there’s been a lack of communication between the applicant and the lender. Lenders should be regularly writing to their Interest-Only customers to ensure that they know they must make plans to repay the capital.
If you have no means to repay the capital, our advice is to keep the lines of communication fully open with your lender. They will be very experienced in dealing with these situations, and you just need to let them know where you stand. Lenders never want to repossess your property, although, they will do this as a last resort.
Here are some of the things you could be doing to resolve the situation:
Following on from our last points, there are far more retirement mortgage options open to borrowers now than there has ever been. If you manage to qualify for one of these, you can continue to pay interest to protect the equity you have in the property. Alternatively, if you are not worried about leaving an inheritance to your children, you can let the interest roll-up and cease making payments altogether.
One major problem in getting a mortgage through Equity Release tends to be the loan to value. You must have a decent amount of equity in your home to qualify for one of these products.
Across the nation we now find that people are paying a lot more attention to their credit rating they might have done in previous years. We find that a large majority of the people who call us for mortgage advice in Leeds perhaps have already researched online to find a copy of their credit report.
There are a wide variety of different credit reference agencies to choose from, but the two most common companies you may be aware of are Experian or Equifax.
We would highly recommend that new customers who get in touch look to use Check My File. In doing so, you’ll find a report that offers customers a collation of information from various sources (the aforementioned two included) in an easy to understandable colour-coded report.
Check My File offers a 30-day free trial. After this 30 days, you will be charged £14.99 a month, although you can cancel this at any time prior to the end of those 30 days.
When speaking with our customers, our mortgage advisors are often asked if they will be doing a credit search on them, as they have done their research and know that too many searches can negatively affect their credit score.
The lender will always run their own credit checks but our mortgage advisors will always ask the customer for permission before doing so. You’ll find that credit searches will come in two forms; hard searches and soft searches. Here we will discuss the difference between the two and how they can help.
A hard credit search is a way to take an in-depth look at your credit report. No matter who they are, any financial institution carrying out one of these will have to seek your permission to do undertake one of these.
The main advantage of a “hard” search would be how in-depth it actually goes. The chances are, if you can pass a hard credit check, it is likely that you will go on to be successful with a mortgage (though this is of course never a guarantee).
From this point on, all that can go wrong with your mortgage process is if for some reason you cannot provide the required documentation to backup the information that you have presented to the lender, or it turns out you have provided incorrect information altogether.
Looking at it from the other hand, another benefit is that having a hard search taken out on you will leave a ‘footprint’ on your credit file, which would mean that anyone taking a look at your report can see that it has been carried out.
This is not a bad thing at all, but let’s say that for some had multiple searches included in your credit file in a short period of time. This could come across to the mortgage lender that you are applying for a lots of credit at the same time and this may put them off.
The footprint will not leave a note as to whether or not your application was successful, so if you have several searches in a short amount of time, the lenders’ systems may assume wrongly that you are being declined regularly. Think about it; why would you apply for credit with a second lender, unless you’d been declined by the first?
Having the occasional hard footprint on your record isn’t too big of an issue, so you really don’t need to worry about it too much. Just be careful not to have too many of these taken out
The alternative to the hard search, would be a soft credit search. This would be a much straightforward search which takes a look at your financial situation and would be the type of search that you might come across when using a price comparison website, so that you can find out what options may be available to you.
Alternatively it can be used to verify your identity. You’ll find that some mortgage lenders will carry out soft searches of their own. We find that nowadays, even more lenders are changing to this type of credit search.
Whilst it will give whoever is carrying out a soft search less information than they would’ve gotten from a hard search, if you managed to obtain an Agreement in Principle from a lender, it is still a very good indicator that your full application will be accepted for a mortgage.
One of the things that appeals to customers regarding soft searches is that you have the ability to see soft searches that others have carried out on you (people are often surprised by how many have been carried out on them), though these searches will not be visible to other financial institutions such as a bank or lender.
This means that you have the ability to apply for an Agreement in Principle ahead of a mortgage in Leeds, without causing any damage to your credit score, regardless of whether it is successful or not.
If you are thinking of making any offers on a property as a first-time buyer in Leeds, our trusted and dedicated mortgage advisors in Leeds would very much suggest that you obtain a mortgage Agreement in Principle in place prior to getting in touch with an estate agent.
You should ideally look to give yourself the best possible chance of securing your dream property at the lowest possible price. With this in mind, if you present yourselves as having your finances in order, you will definitely give yourself the upper hand in your mortgage situation.
Being in possession of an Agreement in Principle could also help prevent an estate agent from trying to cross-sell any of their own mortgage products to you.
University: a place to enjoy freedom, independence and time away from the parents! However, as you know, university life comes with costs and lots of different fees. With constant bills, it can sometimes be hard to see what you’re actually paying for, particularly with student accommodation.
When it comes to student accommodation, you may feel like you’re getting your money’s worth yet sometimes you may feel the complete opposite. You’re in luck if you manage to get a landlord that looks after you and your property and takes care of damages and repairs quickly. On the contrary, you could get a landlord that isn’t responsive at all and leaves you with broken appliances for weeks on end.
Unfortunately, more often than not, students will end up getting a landlord that doesn’t give much back to them and treats them poorly. In this situation, it can make you question, is it really worth spending all of this money to get nothing back? If you’re asking yourself this question, why not consider becoming your own landlord?
When you are your own landlord, you’ll avoid all the hassle and be able to sort things out yourself. You can become your own landlord by taking out a student mortgage. Although it can be expensive in the short term, it can save you money as soon as you get the keys and start living in the property!
A student mortgage will not only allow you to save money on your accommodation but will also give you an early chance to get yourself onto the property ladder. Usually, these mortgages are more popular amongst students who are planning to carry on their education to a masters/PhD level.
Even if living within the property is temporary, you can always sell it in the future and make money back on it. Alternatively, you could turn it into a buy to let in Leeds to rent out to other students.
When your university journey comes to an end, you will have built up a large amount of equity within the property. This equity, when released, can be turned into a lump sum of cash. You can use this cash on whatever you want, whether it’s for another deposit, a wedding, a car, etc. Since it’s your money and your equity, you can spend it how you want.
There are many different things that you could do with your property in the future!
Sometimes, it can be hard to obtain a student mortgage because you’ll need funds in place to afford one, and for a student, this can be difficult.
As a mortgage broker in Leeds, when a student enquires about a mortgage, we have to ask them some questions to learn about their financial situation and see whether they’ll be able to qualify for one or not. Firstly, we will need to find out whether you have a deposit at the ready. Your deposit can be a gifted deposit, from a Lifetime ISA or even as simple as funds from a savings account.
Secondly, we need to make sure that you can actually afford a mortgage. One of our mortgage advisors in Leeds will measure this by working out your mortgage affordability. You will certainly need a form of income to get a mortgage as a student. Depending on your lender, you may be able to get a mortgage with a part-time job, however, most lenders will only accept a full-time job.
Showing reliability is key. You need to show the lender that you’re a reliable applicant that will be able to afford a mortgage. Here are a few examples of how you can increase your reliability:
Increasing initial deposit – By putting down a higher deposit, the overall amount that you’d need to borrow for a mortgage would decrease. This would also mean that your mortgage payments would decrease.
Utilising government schemes – Government-led schemes are a great way to increase your reliability for a mortgage. The schemes are under a program called “Own Your Home”, they were introduced to help first time buyers get onto the property ladder.
Through these schemes, you may be able to access a larger deposit. Some of the schemes include the Help to Buy Equity Loan, Lifetime ISA and Shared Ownership. There are many more if you visit https://www.ownyourhome.gov.uk/all-schemes/.
Have an AIP ready – A mortgage agreement in principle (AIP) can benefit your student mortgage application. An AIP proves that a lender is willing to lend to you based on you providing evidential documents to support your income, mortgage affordability, etc.
This is just a few examples, there are more ways to show your reliability as a student. Get in touch with our mortgage advisors in Leeds today to find out even more ways to improve your reliability.
Likewise to other mortgage options, you will have to meet certain requirements before securing your student mortgage:
With these points in mind, we suggest that you have a think about what you are going to do with the extra rooms. It makes sense to rent them out to help support your mortgage payments each month.
Lenders won’t take any risks when it comes to offering a mortgage student. They will take careful precautions with all student applicants.
When signing off the papers for your mortgage, you’ll be asked to give a name for a guarantor. This is someone who will cover your payments if you cannot meet them at any time. There are some limitations to who your guarantor can and can’t be:
You’ll find that every lender will always have some sort of backup.
For expert help with achieving your mortgage dreams as a student and first time buyer mortgage advice in Leeds, contact our brilliant team today. We will help you see whether you qualify for a student mortgage and perform a free affordability check on you and your file.
For many first time buyers in Leeds, and sometimes for home movers, getting a mortgage can be a struggle. Whether it’s to do with credit score, deposit size or affordability, you may encounter a problem or so along your mortgage application journey.
As a mortgage broker in Leeds, we’ve seen many different reasons why someone has been declined for a mortgage. In this article, we are going to take a look at the most common situations that we come across:
When it comes to matching lender’s credit scores, some will be easy to match than others. Each lender will be targeting their own type of customer, therefore it’s very unlikely that you’ll pass every lender’s criteria, no matter how good your credit score is.
You’ll find that lenders with the lowest rates will have the tightest lending criteria. To pass their criteria, it’s likely that you’ll also need a high credit score and a clean credit history, etc.
Lenders will only take on reliable customers. They will not take on someone who carries a risk of falling into areas over the course of their mortgage term. If you have a bad credit history or currently have bad credit, you may need to approach a specialist mortgage lender.
As a specialist mortgage broker in Leeds, we can access specialist lenders and can check whether you’ll match their criteria. It’s our job to offer help to customers who are struggling with their mortgage journey.
There is always uncertainty as to how much deposit you actually need for a mortgage. Is it 5%, 10%, 15%?
It is all down to your credit score to how much deposit you will be required to put down. Typically, the lower your credit score, the higher your deposit will have to be. Obviously, your deposit total also depends on the property that you’re buying, as property price goes up, so will your deposit.
If you don’t have a deposit in place for a mortgage, it’s very unlikely that you’ll be able to get one. However, you may not need a deposit if you’re taking out a right to buy mortgage in Leeds.
Utilising government-led schemes could possibly help you get a mortgage with a small deposit. There are lots of schemes out there to help struggling customers get onto the property. You could take a look at the Help to Buy Equity Loan, Shared Ownership and the Mortgage Guarantee scheme. There are lots of different options available.
Find out more here: ownyourhome.gov.uk
Sometimes you may not find out the reason why you can’t didn’t qualify for a mortgage. The lender just declined your application.
In this situation, it could be anything from that you’ve applied for the wrong product to that you simply didn’t match the lender’s criteria. As a mortgage broker in Leeds, we like to call this the “computer says no”.
Leedsmoneyman will never put you forward for a mortgage product that we know you will not get accepted for.
Our job, as a mortgage broker in Leeds, is to try and find you a suitable mortgage deal that matches both your personal and financial situation. We will thoroughly measure your affordability and perform a credit check on you; this way, we can start searching for a product that’s perfect for you.
Our team will make getting a mortgage seem easy once you pass the affordability stage. Having a mortgage advisor in Leeds by your side could prove extremely beneficial and will allow you to progress through the mortgage application stress-free.
Now, instead of asking “why can’t it be easier to get a mortgage?”, use a mortgage broker in Leeds!
Our team are available 7 days a week. Book your mortgage appointment online today.
So, you’ve saved up your minimum of a 5% deposit and you want to start making offers on properties, however, you are still being let down and being asked for a larger deposit. This could be down to anything, e.g., sellers’ preference, other competition or your credit history.
From in-depth discussions about utilising the government schemes to simple points such as saving more money and waiting, here are some ways that can help you obtain a mortgage with a small deposit.
Taking advantage of government schemes can really help you through your mortgage journey. There are lots of schemes available that come under the ‘Own Your Home’ umbrella. These schemes were designed to allow opportunities for first time buyers and home movers to get themselves onto the property ladder.
The Help to Buy Equity Loan is a scheme that allows you to increase your total deposit size, hence increasing your chances of your offer being accepted.
The scheme works like so; you take out a Help to Buy mortgage with a minimum of a 5% deposit and your total deposit is topped up by the government to make a total of 25%. The percentage that they give you is the ‘Equity Loan’. This amount will eventually need paying back as it is a loan and not a gift. The loan will be interest-free for the first five years, then, if it hasn’t been paid off, the remainder of the loan will begin gaining interest starting at 1.75%.
Please note that this scheme is only available for new-build purchases and for first time buyers only. Therefore, if you’re a first time buyer in Leeds, this scheme could be perfect for you and help improve your chances of securing a property with just a 5% deposit!
The Shared Ownership scheme is very different. Shared Ownership lets you take a mortgage out on a percentage share of a property (usually between 25%-75%) and then pay the rest back via rent.
Since you are only taking out a mortgage on a smaller percentage of the property, your total deposit amount should be lower. Also, it’s worth knowing that you can increase the share of the property that you own further down the line if you want to. This can be a great stepping stone to get you onto the property ladder.
The scheme is a little complex in some cases. So, we’d recommend that you speak to a mortgage advisor in Leeds like us before diving headfirst into the scheme.
A Lifetime independent savings account should be introduced when you’re thinking of moving or buying your first home in Leeds.
This is because it’s a savings account where your money grows year on year interest-free. You can put as much money in it as you’d like each month, as long as it doesn’t exceed a total of more than £4,000 over the year. This is the maximum that you can save each year.
Each year, the government will top up what you’ve saved by 25%. So, if you save up to the maximum you will get an extra £1,000 for free. The savings from the account can be used for one of two things: buying your first home or saving for later in life.
If you set up a Lifetime ISA at the very start of saving for a deposit, you may only require a small deposit as the lifetime ISA can cover some of it for you!
If you’re currently living in a council house and planning to make an offer on the property, you may only be required to put down a small deposit, or in some cases not one at all.
This is because some lenders offer a right to buy discount through the government since you’ve already been living in the property.
This government-led scheme allows you to get a mortgage with just a 5% deposit. Therefore, if you go down this route, there shouldn’t be many reasons why you’ll be declined.
Of course, getting a mortgage is not guaranteed in any way shape or form. You’ll still be required to pass credit checks, affordability assessments etc.
There are other ways besides using government schemes to get a mortgage with a smaller deposit.
An agreement in principle (AIP) or also known as a decision in principle (DIP), can boost your chances of getting a mortgage with a smaller deposit.
An AIP shows that a lender is willing to lend to you given that you can provide sufficient documentation to prove that you’ll be able to afford a mortgage. If you’re making an offer on a property, you may be putting yourself in front of someone who’s also put in an offer who doesn’t have an AIP in place.
In this situation, it’s not really about the deposit. The indication to the seller will be that they’ll be able to continue through the process quicker by choosing you. Either way, they’re selling their home, choosing you will just speed up their process!
An obvious alternative would be to carry on saving up. Even pushing back your home buying journey for a further 6 months could boost up the total amount of your mortgage deposit.
Your small deposit could become much bigger if you knuckle down and save for just a little longer, in fact, it could get you over the edge that you need.
If there aren’t that many houses on the market that are appealing to you, there’s even more of a reason to wait for a little longer.
Remember that the 5%-mark changes depending on the property. If you want to move into a larger home, you may need to save up more anyway.
This is a very specialist situation and often, lenders will not allow it. As a mortgage broker in Leeds, we’ve seen it happen before, but it’s always on rare occasions.
Taking out a loan to cover your deposit can sometimes affect your ability to get accepted and this is because you are essentially borrowing 100% of the mortgage.
This results in having to account for multiple repayments. Lenders will question whether you’ll be able to afford it or not. They can’t risk lending to you if that loan is going to affect your ability to keep up to date with your mortgage payments.
Again, this is a specialist topic, and we would advise that you speak to a mortgage advisor in Leeds and get in touch with us first. Taking out any sort of loan during the months leading up to your mortgage application could potentially be a bad idea.
Firstly, what is a credit score? A credit score is a numerical value that lenders use to calculate your affordability for a mortgage loan/any form of credit, etc. Although different lenders have their own unique credit scoring models, the credit score that you’ll have listed on your score will likely range from 300-800+.
A credit score below the ‘good’ range may mean that you’ll only be able to access specialist products, whereas, if you have a score that’s greater than ‘good’, it’s likely that you’ll be able to access more competitive products.
As an experienced mortgage broker in Leeds, we handle specialist cases every day. More than often we find that our customers have come to us after being declined by their bank/building society due to a low credit score or something similar. It’s our job to pick up where they left off on their mortgage journey and try to secure them a great mortgage deal.
There are many different reasons why you could have a low credit score. A common reason that we come across is that there is a county court judgement (also known as a CCJ) associated with the applicant’s name. You may receive a CCJ when you’ve taken a loan/borrowed money and have failed to pay off the amount owed. CCJ’s can put a harmful imprint on your credit file for 6 years or more, and that’s why it’s so important that you try and get the CCJ removed from your file prior to applying for a mortgage or make sure that you pay off all owed payments before you receive a CCJ. A CCJ will undoubtedly reflect negatively on your mortgage application and your lender will start asking questions.
Following on from CCJ’s, failing to stick to credit agreements can also harm your credit score. Even failing to keep up with your mobile phone contract payments can eventually cause damage to your credit file. You can’t forget about the little things either, as they can cause damage too. For example, dipping into your overdraft every month could cause a long term negative effect.
These are just a few examples of things that can negatively affect your credit score. Of course, there are lots of other reasons why you may have bad credit and some more obvious than others. It’s our job to try and help you improve your score and give you expert tips to try and get your credit file looking up to shape.
Improving your credit score, especially when it’s low, can sometimes be difficult. When it comes to helping you improve your credit score, we want to give you the best advice possible to help you do so.
You should know that each lender has their own unique passing criteria, so your score may affect what sort of deals you can access from each one. Also, you may not match every single mortgage product, so rather than applying for lots of different products, you could try shopping around for mortgage deals that will definitely match your situation and credit score.
You’ll have a soft or hard credit search performed on you every time that you go directly to a lender and their in-house mortgage advisor puts you through for a deal. This search will leave an imprint on your credit file and other lenders will be able to see the search. If your application is declined, the credit search on your file may have a negative impact on your credit file. This is why we recommend keeping the number of searches performed to a minimum.
This is where we can help! As an expert mortgage broker in Leeds, we aim to get it right the first time, which means that we will take a look at your credit score and only look for products with criteria that we know you’ll pass.
Applying for credit, particularly during your mortgage application, can sometimes backfire on you. If you take out a loan or apply for extra credit if you fail to pay it off before your application, your credit score may dip and it could reflect badly on your credit file.
In some cases, as long as you pay it off, borrowing credit can actually help improve your credit score. This is because you are showing that you are a reliable applicant that meets their payment deadlines.
An easy way to help improve your credit score is to get yourself registered onto the voter’s roll (if you aren’t already). Being on the voter’s roll shows that you are who you say you are and you live where you say that you live. It’s a simple registration process; head over to the official government’s electoral roll page to find out more.
Make sure that you fill out accurate information when registering for the roll. You will need to provide your current living address, so make sure that there isn’t an old one on their system.
During the mortgage application process, you should make sure that all of your information is filled out correctly, double-check that you’ve not got an old address listed anywhere!
Maxing out your credit card(s) each month can heavily impact your credit score, in a negative way. Of course, paying off your credit cards each month will help and may give your credit score a small boost.
If you are exceeding credit card limits and always dipping in and out of your overdraft, they may feel as if you don’t take your finances seriously and are an unreliable applicant.
Your credit score could be getting harmed without you even knowing if you are still financially linked to someone who has bad credit. Whether it’s an ex-partner or a family member, if they are harming your credit score, you should try and get your financial links removed from them. The only way to do this is to get in touch with your credit reference agencies and make a request.
At the end of the day, it’s up to your lender to decide whether they feel like you are the type of person that they want to be lending to. Some may be more lenient than others, whereas some may be strict and won’t give you some leeway.
Sometimes it’s best to get help from professionals like us. Using a mortgage broker in Leeds could allow you to access new, competitive mortgage products. Whether you’ve got bad credit or good credit, it’s our job to try and find you a product that you perfectly match. We have a huge panel of both high street and specialist lenders, each with 1000’s of mortgage deals for you to try and access.
For further credit score mortgage advice for first time buyers in Leeds and home movers in Leeds, feel free to get in touch today.
If you’ve been to your bank and been declined for a mortgage, you need to be careful about applying again and then getting declined again. There could be many different reasons why you’ve been declined, some may be easier to fix than others too, it depends on your situation.
Here we look at some of the most common reasons why people get declined for a mortgage.
One of the most crucial steps to obtaining a mortgage is passing the lenders credit score. Depending on factors, such as your personal and financial circumstances, some may be easier to pass than others.
Each lender will have their own unique lending criteria. Usually, if you are applying for a mortgage through a high street lender, you may be expected to have a higher credit score and be able to match competitive criteria, whereas, if you have a low credit score or have had past credit problems, you may be required to use a specialist lender with limited products.
Failing a credit score may also negatively impact your overall credit rating; this is why we advise that you don’t keep applying to different lenders if you’re getting declined. Rejected applications may show up your credit file, and may affect your score and ability to get accepted for credit.
If you’re struggling to get accepted, you may benefit from using a mortgage broker in Leeds, like us. We are a specialist broker who try and help people in this or similar situations. Rather than getting declined and potentially damaging your credit score, you should get in touch and we will see how we can help!
Folowing on from ‘failing a credit score’, getting declined due to your credit score not matching a mortgage product can be dissapointing, and that’s why you should know that you can sometimes improve it!
If you have a low credit score, it is usually down to previous/current credit issues. This could be something from a CCJ to numerous unpaid phone bills. A low credit score is usually considered as less than 500, so if you fall within this range, you may need to look for specialist products.
You can increase your credit score in some cases. For example, if you have a credit card that you use regularly, you should make sure that you pay the balance off in full each month. Surpisingly, being on the voter’s roll can also help as it shows where you live and adds another proof of address on your credit file. Even closing old credit/store accounts and removing your financial links to others can help improve your score.
Improving your credit score can be tricking, if you watch some more top tips, check out our YouTube Video on “How to Improve your Credit Score“.
Every lender will have their own way of calculating how much you can borrow. It’s possible that you could approach ten different lenders and the outcome is ten completely different answers. Depending on the lender that you’ve used, you may recieve a more lenient offer than others.
Some mortgage lenders will assess 100% of an employee’s overtime and bonuses, whereas others will not. Additionally, some lenders will accept “unearned” income, such as tax credits, child benefits, and maintenance. It’s all down to the lender that you use.
If you use a mortgage broker in Leeds like us , we can approach several different lenders without the need for a credit check in order to perform an affordability assessment. We always advise that you carry out a affordability addsessment prior to applying for a mortgage and viewing properties in Leeds. You want to avoid potential dissapoitment further down the line.
Proving that you have maintained mortgage or rent payments in the past does not necessarily guarantee that you will pass a lender’s affordability test.
All Lenders have their own unique lending criteria. This will be individual to their own products hence, depending on your situations, that’s why some lenders are better than others.
Some lenders have even have their own niches to attract borrowers that they want. Some will tick different boxes, e.g. you may get a specialist lender who aims to help applicants with bad credit, whereas, another lender may stay away from these applicants.
Here are some examples of why your application has been declined for being outside of policy:
As a mortgage broker in Leeds, it’s our job to only compare mortgage products that we know you’ll match. We will never recommend you a product that will not benefit your situation.
Whether you’re a first time buyer in Leeds, or moving home in Leeds, we’re here to help! We know the difficulties that come with the mortgage journey and we know how to get by the majority them.
Get in touch today for a free mortgage consultation. We can’t wait to hear from you!
First time buyers in Leeds like yourselves actively seek out your first home or a Home Mover in Leeds with your house on the property market. However, you may have noticed that some of the more notable estate agents and builders would favor that you use their in-house mortgage advisor and conveyancing services.
As a responsive mortgage broker in Leeds, we have no ties with banks, building societies or estate agents, and we work solely for the customers. In the past, we do often find ourselves speaking with customers whom some estate agents have urged to use their in-house financial services. Some of the scenarios include;
Some estate agents have previous track records of refusing to put an offer forward if you decide to use a different mortgage advisor instead of their own. At times they have also declined to put offers forward to the vendor because someone who has used their in-house mortgage advice service has also made an offer that they’d instead show favouritism.
Another sales tactic we see often is the estate agents quoting immensely overpriced conveyancing fees. In the past, we have had clients who have unfortunately had this happen to them; one customer mentioned they got quoted more than £1,500 for a regular purchase.
With our knowledgeable mortgage advisors in Leeds helping out, we got this cost down. Following this, we suggested that the client use another conveyancer in the nearby area and get this down to £750. That’s precisely half of the quoted price.
Once you have made an offer, you might receive a phone call detailing whether you got accepted. However, the estate agent will call up and demand to know which conveyancer you have used in some cases. It seems like the next logical step.
What follows is that the estate agent declined to take the property off the market unless you agree that you will use their in-house service.
As you might imagine, their quotations will be extortionately overpriced and utterly unfair to the customers, but they will put you on the spot and make you feel like you have no choice to take enlist their services.
The good news is that this is something a mortgage broker in Leeds can help you get prepared. The questions that need answering then are as followed:
No, you have the freedom to go wherever you wish when it comes to your mortgage process. You can use any broker, any conveyancing or any other financial service. It’s all down to what you would personally prefer.
You are under no obligation to use the services on offer from the estate agent, as their job is to foresee the sale between yourself and the vendor.
“Keeping everything under one roof is easier with one point of contact.”
“If you use our services, it will give the vendor peace of mind that everything will go through smoothly.”
“We will do all of the chasings of the solicitors for you, and they’ll be more responsive to us due to the amount of work we send them.”
“You need to come in and see our mortgage advisor for your offer to be qualified.”
“Everything is likely to go through quicker if you use us.”
“Free carpet/washing machine if you use our (extortionately priced) recommended conveyancing service.”
“Choose us and your offer is more likely to be accepted if you use our mortgage advisor.”
“Our service gets better deals than most brokers.”
Always remember, when negotiating a purchase price, is it really within your best interests for the person selling the property you’re interested in buying to know your financial situation and potentially know how much you’re able to borrow to pay for that property? Something which they can then use against you to convince you to use their financial services?
Stay vigilant and make sure that they know this and do not guilt you into a trap if you do not want to use it. It’s your mortgage, your offer, your potential home. Getting in touch with a dedicated mortgage advisor in Leeds will help you be as prepared as possible in advance of encountering these tactics.
A lender will need to see your bank statements to learn more about you and your spending habits. How you have acted lately, and the presentation of your bank statements can affect how much a lender will let you borrow, if anything at all.
The lender needs to know you’re responsible with your money and can be trusted to handle finances appropriately. After all, a mortgage is likely the most significant financial commitment you will ever make in your life.
Your bank statements are easily obtained either in the post from your bank, over the counter from your local bank, or, as often seen these days, as a printable version from your bank’s online platform.
Again, they need to know you’re responsible for your finances. One of the things they’ll be looking at is if there are any overdrafts. Using this often is not necessarily a bad thing, but if you exceed your limit regularly, this will put your level of trust into question.
More factors to be careful with are potential returned Direct Debits, showing a lender you are not consistently reliable and not disclosing loans at the application stage. It won’t look good if the lender finds outgoings on your bank statements that you failed to mention. Once again, this is a process of trust.
Other things include missed payments for personal loans and items such as credit cards. If you can prove you handle your money well and meet monthly payment deadlines, a lender will be more likely to lend you an amount closer to what you would like to borrow.
Customers find themselves stuck when they have a history of gambling. The occasional bit of fun is harmless, but if you are frequently betting large amounts of money, whether you’re making it back or not, a lender will not look at your situation favourably at all.
To learn more, please see our article on “Do Gambling Transactions Look Bad on My Bank Statements?”
From our experience working with many First-Time Buyers in Leeds & Home Movers in Leeds, we have found that most mortgage lenders will want at least three months of bank statements from an applicant.
With that in mind, it’s time for you to forget the past and think about the future. You have at least three months to work on your finances. The first thing we’d suggest is that if you are a frequenter of the local bookmakers or online gambling scene, you take a break for some time. Not only does this benefit your financial state, but it can benefit your mental health too.
The following steps we would recommend taking are to trying to save money. For example, cooking instead of eating out, treating yourself to unnecessary purchases and cancelling unneeded subscriptions are great ways of freeing up additional cash to ensure you can pay bills on time.
Again, this boils down to simply being sensible and planning with plenty of time ahead of what you’re looking to do. The further away you find yourself from bouts of debt and financial uncertainty, the better your chances will be with a lender.
When lenders ask for your bank statements, you can expect them to look for various things. Remember, their goal is to assess whether you are the sort of person who has the suitable funds to keep up to date with their mortgage payments. In recent months, we receive a handful of enquiries asked by applicants regarding if gambling transactions look bad on their bank statements.
Whether you have an odd bet on the world cup or regularly use internet betting sites, there is nothing illegal about licensed gambling. And the adverts do urge customers to gamble responsibly, and the same principles are the same when applying for a mortgage.
Whilst it is not a lender’s job to tell you how to live your life, how to spend your money or indeed to moralise on the ethical rights and wrongs of gambling, they do have a duty (underscored by mortgage regulation) to lend responsibly.
Suppose lenders need to prove to the regulators that they are making prudent lending decisions. In that case, it isn’t entirely unreasonable of them, therefore, to expect the people to whom they lend to adopt a similar approach when it comes to their finances.
Think about it. If you were lending your own money to a ‘friend’, would you lend it to someone who frequently gambles or the one who doesn’t?
Again, it is not illegal to gamble; having the odd gambling transaction on your bank statements doesn’t automatically mean your application will get declined for a mortgage.
The lender will consider whether these transactions are reasonable and responsible. They will mainly look at the frequency of these transactions, the size of the transactions about the person’s income and the impact upon the account balance.
If these transactions are infrequent small amounts that make no significant impact on a regular credit bank balance, then they are not likely to be regarded as necessary. However, if you bet most weeks or constantly overdrawn, the lender is expected to see that as irresponsible and decline your application.
As we’ve seen, lenders are looking at your bank statements to show how you manage your money and to help them establish whether this gives them either the confidence that you are financially reasonable or the evidence that you are not.
Remember, lenders, are financial institutions that, either directly or as part of a wider group, often sell current accounts, overdraft facilities, credit cards and personal loans, so understand that these things can all play a role in financial planning.
Nothing wrong with having an overdraft and occasionally using it. That’s what it’s there for; however, regularly maxing the overdraft limit each month is not good. Therefore, lenders will look for excess overdraft fees or returned direct debits because these would generally show that the account is not getting handled well.
Other things to look out for include credit transactions from payday loan companies; “undisclosed” loan repayments (i.e. if you said on the application that you have no other loans but there appear to be regular loan payments, this could be a problem);
They would look out for any missed payments; they might also consider how much of a typical month gets spent overdrawn – i.e. if you only go into credit on payday and the rest of the monthly earnings get stretched, how sustainable is this mortgage?
The simple answer is – be sensible and, if possible, plan. Typically, a bank would ask for up to three months of your most recent bank statements. These will show your salary credits and all your regular bill payments.
Therefore, if you know you’re likely to want to apply for a mortgage in the not-too-distant future, try to make sure that you avoid any of the above pitfalls. Take a break from gambling for a short while and work on presenting your bank account in the best possible light.
Your mortgage broker in Leeds can help you as some lenders may ask for fewer bank statements than others, or indeed, some may not even ask for them at all.
However, even these lenders would reserve the right to request bank statements in certain circumstances, so your best bet (no pun intended) is to be as prudent as possible in the run-up to any mortgage application. Remember, if you do gamble, please gamble responsibly!
If you are a First Time Buyer in Leeds who doesn’t know a lot about mortgages, you should get some specialist advice from a Mortgage Advisor in Leeds. They will guide you through the whole mortgage process and help you with your application and get you on track so that lenders will be impressed.