Five things not to do if you want a mortgage - what do lenders avoid?

Posted 19 February 2016 by Nick Parkhouse

When it comes to securing a home loan, what you don't do is as important as what you do do, so what are mortgage lenders hoping to avoid?

If you are looking to get a mortgage there are lots of ways in which you can help to increase your chances of being accepted. Thinking about what your bank or building society will want to know in advance of your application is crucial to maximising your chances of getting the home loan that you need. Of course there are also ways in which you can harm your chances of getting a mortgage. Here are five things to avoid if you don't want to be turned down.

Miss payments on other debts

The vast majority of lenders carry out a 'credit search' on mortgage applicants. This means that they will access your credit file to establish how well you have managed your credit in the past.

If you have missed payments on other mortgages, credit cards, store cards, loans or other finance in the last few years this can adversely affect your credit score. It will make it much less likely that you'll be accepted for a loan.

If you want to get a mortgage you need to make sure you manage all your credit carefully and make all payments on time.

Become self-employed immediately before applying for a mortgage

Banks and building societies all need proof of your earnings. Whether that is payslips, your P60, accounts, or your tax return, a lender will want you to evidence your income.

If you're self-employed a lender will generally need your accounts for the last two or three years. If you are newly self-employed it can make it very difficult to get a mortgage simply because you can't prove a track record of your earnings.

Spend all your cash on going out

Beer bottlesSince April 2014, lenders have an increased responsibility to ensure that you can afford to pay your mortgage. Banks and building societies have started to look in forensic detail at your outgoings - not just on credit commitments but also on how much you spend on clothes, eating out and even gambling.

If you spend every last spare penny on restaurant meals and going out it will make it much harder for a lender to demonstrate that you will be able to afford your new mortgage, particularly when interest rates rise in the future.

Throw away all your paperwork

If you are one of those people who doesn't keep their payslips, bank statements or official documents then you may also find it hard to get a mortgage.

Banks and building societies will ask you to produce a range of documents in order to be approved for a home loan. This will include salary slips, bank statements and other items such as your P60 or proof of your life insurance. If you don't have this information, it will be hard to get the mortgage you need.

Plan to start a family immediately

Somewhat controversially, it has emerged over the last couple of years that borrowers who intend to start a family - or where one party is pregnant already - are finding it harder to get the mortgage they need.

Lenders apply strict affordability tests and many have concerns that borrowers won't be able to afford both their mortgage and the childcare costs associated with starting a family.

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