How to get a mortgage if you’re struggling

Money Advice Service

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?

Your credit report is a record of your financial history, including:

  • Utilities
  • Credit card payments
  • Any missed payments

Use our Mortgage affordability calculator to estimate how much you can afford to borrow to buy a home.

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.

Need someone to talk to about your finances?

If you’re struggling with money, you can talk to someone today, online, by phone or face to face. We have specially trained advisers who can help you start sorting out your financial problems.

Find free, confidential advice now using our free debt advice locator tool.

There are a number of factors that could count against you, such as:

  • A lack of financial history
  • Missed or late credit repayments
  • County Court Judgements against you for non-payment of bills

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.

Lower income?

Lenders will look at how affordable your mortgage payments will be before granting you a loan, so you might 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:

  • Your bills
  • Your living costs, and
  • The Mortgage repayments

They’ll also look at whether you’ll 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.

There are various schemes you can look into, including Help to Buy, shared ownership, Right to Buy and others.

Small deposit?

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.

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.

Self-employed?

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 might also ask for your business projections to reassure themselves that your earnings will continue to be at the same level or higher.

It might help to take advice from a specialist.

Find an independent mortgage adviser at unbiased.co.uk.

Lived 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
  • 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.

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.

Find an independent mortgage adviser at unbiased.co.uk.

Your next step

This article is provided by the Money Advice Service.

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Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

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