How to Improve Your Chances of Getting a Mortgage

Applying for a mortgage can feel like one of the most daunting tasks – a dreaded gateway to finally securing homeownership. Lenders, borrowing power, interest rates, where do you start?

Whether you’re a first-time buyer or an experienced homeowner, understanding the process and how to strengthen your chances of getting a mortgage early on can make your journey less stressful, simpler, and can help you get the most out of your application.

So, how do you improve your mortgage application and give yourself the best chances of getting a mortgage?

In this article, we jump into everything you need to know about improving your mortgage application. From credit score and borrowing to debt and documents, by the end of this article you’ll know how to get approved for a mortgage loan. Let’s begin.

How Can I Improve My Credit Score to Get a Mortgage?

To improve your chances of getting a mortgage, it’s essential to understand how your credit score affects your application. The best way to improve your credit score is to demonstrate reliability with a strong history of paying bills, loans, and direct debits on time. To improve your chances of getting a mortgage, reassuring lenders that you are a reliable borrower who has both the funds and can manage repayments responsibly is key.

Lenders will use your credit score as an overview to assess your financial habits and debt,  evaluating the level of risk you present as a borrower. Naturally, a higher credit score will show a strong financial reliability, increasing your chances of getting a mortgage. On the other hand, a lower credit score may result in higher interest rates, and for some stricter lenders, it could even lead to a declined application.

In short: credit scores are just one of the factors that lenders use to help determine your ability and likelihood that you will meet your agreed upon repayments. However, it is important to note that credit score is just one of several factors used in assessing affordability alongside income, deposit size, and existing debt.

Understanding Credit Ratings

One of the most important aspects of credit scores is that your individual credit ratings can vary between credit reference agencies, and lenders will often use their own credit agencies scoring systems. As such, it can be very difficult to pin-point your credit score in relation to your chosen lender. While you might see a “fair” rating from one company, another agency may classify your score differently.

Most UK lenders will typically check your file with one or more major credit reference agencies, such as Experian, Equifax, or TransUnion, to get a comprehensive view of your credit history. Knowing this can help you plan ahead and you can request a soft credit check on your own credit profile, before your mortgage application submission.

Crucially, a soft check is harmless to your score and will usually happen when you check your own credit or when a lender does a quick eligibility check. A hard check, on the other hand, happens after you submit a mortgage application and allows lenders to see your full credit history. Multiple hard credit checks will negatively affect your credit score and so it is never advised to complete multiple mortgage applications in quick succession.

So, what can I do to help improve my credit?

This is one of the most common question we get asked here at Boon Brokers, and so, for your convenience we have created a short checklist below on how to improve your credit score and make your application as strong as possible:

In the UK, you can check your credit score with the main credit reference agencies before applying for a mortgage. Checking your score helps you spot errors, monitor improvements, and understand how lenders may view your application. Doing this ahead of time ensures you can take steps to strengthen your profile and increase your best chances of getting a mortgage.

How Much Deposit Do I Need for a Mortgage?

The exact deposit amount will wholly depend on your chosen lender and mortgage deal that you’re looking to secure. For a standard mortgage, most lenders in the UK will require a minimum deposit, often around 5% to 10% of the property’s value, with some specialist lenders offering unique products that accept just a 1% deposit.

The most important consideration with deposit size is understanding loan-to-value ratio. As a general rule of thumb, the lower the loan you require, the less risk for the lender.

What does this mean in practical terms?

Having a larger deposit often greatly improves the chances of your mortgage success, as well as helping you access better interest rates.

It’s important to note at this juncture that lenders will request to see proof of your deposit. This evidence can be provided through a variety of ways, including: bank statements, savings account records, or evidence of a gifted deposit from a friend or family member. Being prepared with documentation that clearly shows your proof of deposit for a mortgage can speed up the application process and make you a more attractive borrower.

While some products, like no deposit mortgages for renters, do exist, these are limited and often come with stricter lending criteria or higher rates. By working with a trusted mortgage broker – like Boon Brokers – you can explore all of your options and create a mortgage strategy that works for you.

At Boon Brokers, our dedicated mortgage experts will take the time to listen to your requirements and goals for the future. With whole-of-market access, we will search across the mortgage market to ensure we find the mortgage deal that matches your needs and provide you with clear, transparent and completely fee-free mortgage advice.

What Debt-to-Income Ratio Do Lenders Accept?

Debt-to-Income ratio compares your monthly debt repayments, including loans, credit cards, and any other financial commitments, against your monthly income. Lenders use this calculation to assess how much of your income is already committed to other debts, ensuring that you could comfortably manage the additional debt of mortgage repayments reliably.

In the UK, most lenders look for a debt-to-income ratio for a mortgage loan to be around 35% to 45%. While this exact figure can vary from lender to lender, in practical terms, this means that your total monthly debts should ideally not exceed roughly 35 – 45% of your monthly income.

Naturally it follows that, should a higher proportion of your total income already be taken up by debts, your overall affordability assessment may lead to a declined application or less favourable mortgage offers.

Top Tips to Improve Your Debt-to-Income Ratio

While increasing your income is much easier said than done, there are some additional tips and tricks that can help you improve your debt-to-income ratio.

1. Pay off any outstanding credit debt or loans.
2. Avoid taking on new debt, and focus on managing your finances more closely in the months leading up to your mortgage application.
3. If possible, consider increasing your income through additional income avenues such as overtime, bonuses, or other legitimate sources.
4. Ensure that you keep evidence of all documentation of your existing debt repayments up-to-date for lender verification.

Management is the key word when it comes to debt-to-income. Maintaining a healthy debt-to-income ratio can help show lenders that you are financially responsible and are capable of managing mortgage repayments. This can help boost your overall financial profile, lower your risk as a borrower, and improve your chances of getting a mortgage.

How Important Is Job Stability for Getting a Mortgage?

Job stability goes hand in hand with income stability, making it a key factor that can influence the success of your mortgage application. Before approving any mortgage loan, lenders need to ascertain a degree of certainty that you will be able to reliably afford the agreed upon repayments.

Applicants with a steady employment history, either through permanent employment contracts or long-term roles, are generally viewed more favourably. This is because a steady income through continuous earnings demonstrates to the lender a strong financial stability.

Lenders in the UK will typically look for at least three months of continuous employment, though some lender criterias will request a year or more in the same role or sector.

While frequent job changes or gaps in employment can raise concerns over your financial income and affordability,  it’s important to note that a job gap or switch of careers does not automatically prevent you from securing a mortgage.

A lender’s main objective is to assess your overall affordability, including employment stability, income amount, and even career trajectory when appropriate. All of these factors will play a role in defining your financial profile and mortgage application.

One of the most asked questions by first-time buyers we get asked here at Boon Brokers is: “Can I apply for a mortgage immediately after starting a new job?”

The answer is: Yes, many lenders will accept applicants who have a new job role. The best practice is to have evidence of a stable history (preferably in the same field) and can provide a signed contract and any recent payslips.

If you’re applying for a mortgage with a new job, it’s important to be aware that some lenders will consider your start date, contract type, and previous employment history.

Even in the event that you do not have a long-standing history of employment, working with a trusted whole-of-market broker, like Boon Brokers, can help find and compare different lenders to find a mortgage that matches your specific financial situation.

Should I Get a Mortgage Agreement in Principle Before House Hunting?

A mortgage agreement in principle (AIP) is an estimate from a lender that shows how much you could potentially borrow, should your application be approved. It’s important to understand that an AIP will not increase your chances of getting a mortgage, but it can help you focus your property search by setting a realistic budget.

An AIP provides a realistic estimate from your lender, showing the price range you can afford. This allows you to streamline your property search and concentrate only on homes within your budget.

In addition, AIP can help you commit to any property you find, demonstrating to the sellers that you are a serious buyer already in the process of acquiring your mortgage.

So, how reliable is a mortgage in principle?

It’s important to note that a mortgage agreement in principle is only an estimate, not a guarantee of approval. Your full mortgage application must still be approved, and the exact amount you can borrow may change once your lender completes a full assessment.

As such, it is still possible to have a mortgage declined after agreement in principle. This will only usually happen if your financial circumstances change or if your chosen lender uncovers any discrepancies in your supporting documents.

What Documents Do I Need for a Mortgage Application?

Having all the essential and supporting documents ready and submitted alongside your application is vital in any mortgage applicant. Lenders will need these documents to verify your identity, income, financial commitments, and the source of your deposit. Without these documents, your mortgage application will likely be declined.

Documents you will need to include in your mortgage application:

• Proof of Identity

Documents that can provide lenders with clear identification, such as a passport or driving licence, will be required to confirm who you are. Lenders need this to ensure the application is legitimate and to meet legal requirements.

• Proof of Address

Recent utility bills or council tax statements (typically from the last three months) can be used to prove your address. This helps lenders verify your residential history and contact details.

• Income Evidence

Payslips, P60s, or tax returns if you’re self-employed can all be used to provide proof of income and help demonstrate your ability to meet mortgage repayments. Lenders will require these documents to help assess your affordability and financial stability as a potential borrower.

• Bank Statements

Usually covering the last three to six months, bank statements will provide evidence of your income, outgoings, and savings. They help lenders understand your spending patterns and ensure you have sufficient funds for your deposit and ongoing mortgage costs.

• Proof of Deposit

Bank statements, savings account records, or gifted funds documentation can all be used to provide evidence of where your deposit funds have come from. This reassures lenders that your deposit is legitimate and readily available.

In addition to these listed documents, you may also need to provide additional documentation that is specific only to your chosen lender.

Working with a trusted mortgage broker can help guide you through all the documentation that you will need for your mortgage application. At Boon Brokers, our expert mortgage advisers will take you through every step of the process, ensuring you know exactly which documents you need and how to organise them.

What Financial Mistakes Should I Avoid Before Applying for a Mortgage?

Being vigilant with your finances and providing clear and dated evidence of your financial security is the key to a successful mortgage application.

Lender’s assessments do not just evaluate your income and deposit amounts, but also your overall financial behaviour. As we’ve touched on previously, taking on new debt, missing payments, or carrying high credit card balances can all negatively impact your affordability assessment, and ultimately, your application outcome.

Below we have listed the top 3 most common financial mistakes to watch out for:

• Overusing Credit Cards or Loans: High outstanding balances can signal financial strain to lenders and reduce your overall borrowing potential.
• Applying for New Credit: Opening new accounts or loans before submitting your mortgage application can flag financial strain to the lender, lower your credit score, and can negatively affect your assessment.
• Missing Payments: Late or missed payments on any financial commitments, including utilities or existing loans, can show a pattern of behaviour, negatively impacting both your credit score and lender’s risk assessment of you as a borrower.

In the scenario that your finances are not perfect or you have a certain reliance on credit – don’t worry. Lenders in the UK do not expect a flawless account and will typically allow a manageable level of debt. The only time this might become a problem is when you’re carrying significant credit card debt or multiple loans.

Should I Use a Mortgage Broker?

If you’re unsure on how to complete a mortgage application, what is involved, what documentation you need, or which lender you should choose – then working with a trusted mortgage can make all the difference.

A trusted whole-of-market mortgage broker can act as your personal guide to finding the ideal mortgage, providing expert advice, saving you time, and boosting your confidence throughout the process.

At Boon Brokers, our dedicated mortgage experts take the time to understand your financial situation and mortgage goals. From clearly explaining your options to highlighting potential pitfalls, we’ll help you prepare your documentation, optimise your application, and identify lenders most likely to approve your mortgage.

With whole-of-market, our experts compare deals from across the UK market to find the most suitable deal that matches your needs – completely fee-free.

Ready to take the next step and secure your ideal mortgage?

Contact Boon Brokers today and start your mortgage journey with confidence.