Category: Mortgages

With so many mortgage types available on the market, it can seem a little overwhelming.

Two popular mortgage types in the UK are undoubtedly interest-only mortgages and repayment mortgages. 

According to a report by Statista, in 2022, interest-only mortgages in the UK made up 12% of the market share with an even split between fixed-rate and variable interest options.

The same report tells us that in the same year, 86% of mortgages were repayment mortgages, with 73% on a fixed rate and 13% on a variable rate.

Property buyers, especially first-time buyers, may wonder if they should look for a capital repayment mortgage or an interest-only mortgage, and that’s what you’re about to find out!

Repayment Mortgages and Interest-Only Mortgages in the UK at a Glance

	Repayment Mortgage	Interest-Only Mortgage
Repayment of loan	Pay back a portion of the interest and the capital amount each month	Pay back only the interest amount in instalments each month.
At the end of the term	At the end of the term, you’ll have paid of the property in full	At the end of the loan term, you’ll need to settle the capital amount as a lump sum
Payment amount	Higher monthly payments than an interest-only loan	Lower monthly payments than a repayment loan

What’s the Difference Between Repayment Mortgages and Interest-Only Mortgages?

Mortgages need a repayment strategy, and that’s why choosing the right type of mortgage is important.

If you cannot pay your monthly instalments, the lender may repossess the property! Understanding what sets interest-only and repayment mortgages apart is important. 

Interest-only mortgages cater to paying off only the total interest charged on the mortgage. 

Repayment mortgages focus on paying back the total amount, including a portion of the interest and capital amount. 

You may find that interest-only mortgages have lower monthly instalments attached, but that doesn’t particularly mean that interest-only mortgages are the best route.

If you don’t have a lump sum available at the end of the loan to pay off the capital amount, you’ll find yourself in a financial pickle.

A Closer Look at an Interest-Only Mortgage in the UK

While interest-only mortgages in the UK come with lower monthly instalments, they come with a big downside: the large lump sum you’ll have to pay towards the capital amount borrowed at the end of the term.

Applying for this type of mortgage is only recommended if you’re certain you’ll have the lump sum available at the end of the term.

Most borrowers have an asset or an investment they plan to sell or withdraw from at the end of their interest-only mortgage to settle the outstanding amount.

Popular investments to pay off an interest-only mortgage’s capital amount include a pension, investment fund, or ISA.

The sale of an asset, such as property or using an inheritance, is also accepted. 

It’s important to note that a mortgage provider won’t grant such a loan to someone who doesn’t have a definitive repayment strategy to present. This will be checked for viability during the loan application. 

It’s hard not to be attracted to an interest-only mortgage in the UK.

After all, you’ll be paying a lower monthly instalment, which provides a bit of breathing room, and you’ll enjoy greater control over your investments and how you’ll save towards the final payment.

There’s always the risk of your intended repayment plan for the capital amount falling through or not performing, which means that interest-only mortgages aren’t suited to people who don’t have a solid repayment strategy. 

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A Closer Look at a Repayment Mortgage in the UK

One of the perks of a repayment mortgage in the UK is that with each monthly payment, you’re reducing the total amount you owe. At the end of the term, there’s no lump sum to worry about.

You’ll have paid off the total loan and the property will be yours – no additional fees required. 

With repayment mortgages, the amount of interest you pay over the total term of your loan is less because you’ll be actively reducing the total amount owed each month.

As the term of your mortgage progresses, you may even find that you’re eligible for lower interest rates as the total outstanding has reduced. 

There’s less risk involved as you won’t need to have a repayment strategy for a large lump sum at the end of your loan term. Instead, you’ll own the property outright. 

Switching Between Mortgage Types

It’s fairly common for buyers on an interest-only mortgage in the UK to consider switching to a repayment mortgage.

While this can be tricky because you will be moving into a much higher monthly instalment, some lenders will approve such a switch.

The options are varied, including:

• Opting for a part and part mortgage where you can make payments towards your outstanding capital amount as well.
• Keep the same term and interest rate while switching to a repayment mortgage with your existing mortgage provider.
• Opting to apply for a new repayment mortgage deal with your current mortgage provider. 
• Approaching a new lender to remortgage your existing deal onto a repayment mortgage option.

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Using a Professional Mortgage Broker

If you intend to switch between mortgage types, it’s always best to acquire the assistance of a professional mortgage broker or advisor who can advise you on the mortgage providers to approach, what to do to increase your chances of approval, and also, to help you search the market for better deals that may save you money in the long run.

Consulting with a mortgage broker may save you time and hassle, making the process of buying a property or switching from one mortgage type to another less of a headache.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

There are several ways that you can buy property in the UK. If you wish to buy property and take personal residence, you may wonder if there are ways you can purchase that property that helps you cut back on costs and taxes.

You could buy the property through a personal mortgage or opt for another type of mortgage, with limited company mortgages being a popular option.

According to the Office for National Statistics in 2021, around 62.5% of households own the accommodation they live in with around 37.3% renting property. 

If you have a limited company in the UK that owns property, you may wonder if you can take residential occupation of the property.

The answer is yes, you can live in a house owned by your limited company, but it’s not recommended. 

If you don’t understand tax and how mortgages work, you may want to consult a mortgage advisor before purchasing a property through your limited company for personal occupation. That’s because things can get a little tricky. 

Understanding how to purchase property through a limited company will help you better understand if it’s a process that’s worthwhile for you financially or not.

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Benefit in Kind (BIK)

One of the first things you need to know is that if you’re residing in a property that’s acquired through your limited company, it may be seen as some kind of perk.

The one you need to know about is the “Benefit in Kind” scenario.

Benefit in Kind is something that may apply to you if you choose to live in a property that you purchase through your limited company.

As an employee of your company, living on the property may be seen as notional pay or fringe benefits by the HMRC. And fringe benefits and notional pay are taxed at a rate between 20% and 45%.

Of course, you can get around this taxation, but you’ll then need to pay full commercial rent to the limited company.

25% corporation tax will also apply if you choose to sell the property in the future, where this tax amount doesn’t apply to a personal property sale.

Is it Possible to Buy Investment Property or a Buy to Let Through a Limited Company?

Many people use their limited company to buy a buy to let property or investment property. There are some benefits to expect.

For instance, when buying such a property through a company, the corporation tax is 25%, whereas when you buy a private property personally, the tax is 45%.

Private landlords can no longer subtract the cost of a mortgage from rental income, whereas this is possible with a company.

Disadvantages of Buying Property Through a Limited Company

One of the biggest challenges you’ll face is that not many mortgage companies are keen to offer limited companies mortgages.

In some instances where it is possible, the mortgage company may expect the company directors to provide personal guarantees on the home loan. 

Mortgage companies see mortgages for limited companies as a higher risk than a personal mortgage, which may be reflected in the higher interest rates.

There’s also the possibility of incurring capital gains tax if you have to sell a property to your new company and that property has increased in value.

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Overview of Pros and Cons of Buying Property Through a Limited Company

A general understanding of the pros and cons of buying property for personal use through a limited company can help you determine what the best course of action is for you.

Pros:

• Tax savings

Buyers can cut back on tax by buying property through a limited company.

For private landlords, the profits are taxed through income tax, shares, dividends, and salaries between 20% and 45% whereas property bought through a limited company comes with lower corporation tax at 25%.

• Mortgage tax savings

Limited companies that own property can treat interest charged on the mortgage as an operating expense, which means you could get a 100% relief on the income.

Cons:

• Fewer options

Not all mortgage providers will approve loan applications for property through a limited company.  With fewer options, it’s harder to find a mortgage package that perfectly suits your situation. 

• Tax

When you take money out of the limited company, you’ll face a few challenges in terms of withdrawals and tax implications. The money needs to be taken out as dividends or a salary.

In terms of dividends, the first £2000 is free from tax, but anything above that will come with costs between 8.75% and 39.35%. This is tax over and above corporation tax.

Reduced dividend exemptions are expected from April 2024.

In terms of salaries, PAYE and national insurance contributions are expected and these can be higher than the tax fees charged on dividends. 

• Property transfer costs

If you own private buy to let properties, you won’t be able to transfer them to your company cost-free.

The transaction is seen as a regular buy/sell, which means the traditional costs involved will apply, including mortgage repayment costs, legal fees stamp duties, and capital gains tax.

Can I Live in a House Owned by My Limited Company? Conclusion

Deciding whether to purchase a property privately or through a limited company is a decision that affects you financially for the long term.

It’s a good idea to speak with your account or tax consultant and to also get some guidance from a professional mortgage broker or advisor with experience in the field.

With the right advice and guidance, you’ll be able to decide what type of mortgage route is best for you in your current situation. 

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

The idea of getting a mortgage to buy your first home in the UK may be exciting until you see the deposit requirements!

Many potential buyers find themselves able to afford mortgage repayments but can’t drive up the funds to put down the initial deposit. 

In most instances, mortgage providers require the borrower to put down a 5% deposit, meaning you’d need to shop around to find a mortgage provider who can front you the remaining 95%. 

The good news is that some lenders offer 100% loan-to-value (LTV) mortgages, sometimes called no-deposit mortgages.

LTV mortgages in the UK are based on the buyer borrowing the entire amount to purchase the property. 

While 100% LTV mortgages are available, it’s important to note that lenders view borrowers who can provide a deposit more favourably.

And the more deposit you can drum up, the more likely you will get approval from a UK mortgage provider. 

While 5% to 20% are the most common deposit amounts provided by buyers, the bigger the deposit, the more likely you are to get funding and, of course, the better the interest rate offered may be.  

But what if you don’t have a deposit available or don’t necessarily want to pay one? 

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Getting a 0% Deposit

While 0% mortgages aren’t impossible, they are rare. This type of mortgage is best suited to people who cannot save up enough to put a deposit down on a new home.

During the financial crisis between 2007 and 2008, most lenders stopped offering 100% mortgages. 100% mortgage options only recently returned to the regular mortgage market. 

The best candidates for 100% mortgages are people who:

• Have an excellent credit score
• Can prove their regular, sufficient income
• Have minimal or no existing debt

Mortgage providers look for affordability, so it’s also important to apply for a mortgage amount that you can realistically afford.

Along with the major perk of getting a mortgage with no deposit, it’s important to understand the possible drawbacks of a 100% mortgage, aka a 0% deposit mortgage. These include the following:

• Higher interest rates than regular deposit-based mortgages
• Establishment and application fees may be higher
• The possibility of negative equity if the value of your new home drops

What Are the Alternative Options to a No-Deposit Mortgage?

It stands to reason that many people who apply for no deposit mortgages in the UK may be rejected/denied.

If that’s the case, you may wonder what your alternative options are.

Below are a few avenues you should consider if your application for a 0% deposit mortgage is rejected:

1. Guarantor Mortgages UK

You may be able to increase your chances of a 0% deposit mortgage in the UK if you have a guarantor.

In such instances, a family member or friend who has their own mortgage (or is a homeowner) and a good credit score with regular income must elect to co-sign the mortgage contract with you.

This increases your chances of approval because the guarantor’s home is used to secure the loan.

This is risky for the guarantor as their home can be repossessed if they default on the terms of their home loan.

Alternatively, the guarantor can use their savings to help you secure the mortgage. The mortgage provider will require the guarantor to provide a lump sum, which they will put into a savings account as security.

The guarantor can only access their savings again when you have settled a certain amount of your mortgage.

2. Shared Ownership Mortgages

Another viable alternative to no-deposit mortgages is the shared ownership mortgages available in the UK. With a shared ownership mortgage, you can purchase a certain percentage of a home.

This amount usually ranges from 25% to 75%, with the developer or the local authority owning the balance. You’ll pay a rental amount on the percentage you do not own.

The perk of such a deal is that the required deposit is usually small, between 5% and 10%, and the mortgage amount is smaller.

3. Right to Buy Mortgages

If you’ve been living in council housing, you may be able to take advantage of a right to buy mortgage.

This applies to people who have lived in council housing for 3 or more years, entitling them to reduced rates.

For some, the discount can be as high as 70% of the home’s total cost. Sometimes, mortgage providers may even consider the discount you receive as a deposit amount.

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4. Joint Mortgages in UK

If you have a partner or family member you’d like to invest in property with, a joint mortgage in the UK may be the option for you.

The upside of a joint mortgage is that the mortgage provider will consider your combined income for affordability and you can then split the monthly instalment, making your personal responsibility less demanding on your budget. 

Can I Get a No Deposit Mortgage if I am Self-Employed?

Most self-employed people worry they cannot get a mortgage because they don’t have a payslip to prove their income.

The reality is that the same criteria apply to self-employed people as traditionally employed people.

If you’re applying for a mortgage of any kind as a self-employed individual, you will need to provide two full years’ worth of financials for the mortgage provider to consider.

You’ll also need to meet the usual requirements, such as being of legal age, proof of paying your rent for the past 12 to 18 months, and proof of affordability.

Most mortgage providers will allow borrowers to apply for up to 4.5 times their income.

Deposit Free Mortgage UK Conclusion

Applying for a mortgage in the UK is a big step for anyone.

If you’re not entirely sure of your options or want some assistance calculating what you can afford and determining which lenders are best to approach, acquiring the advice of a professional mortgage advisor is advised. 

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

When buying property in the UK, you’ll need to decide which type of mortgage is right for you.

Tracker and fixed mortgage are common options, but there are others to choose from.

With many mortgage deals to choose from and interest rates that fluctuate depending on the lender or deal type, it’s important to know your options and which are best suited to your financial situation. 

There are three main types of mortgages in the UK:

1. Capital repayment mortgages
2. Interest only mortgages
3. Part and part mortgages

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Capital Repayment Mortgages in UK

Capital repayment mortgages have a simple loan format. The total amount that you borrow, along with the interest, is split over the mortgage term.

For instance, if you take out a 30-year mortgage, by the end of the 30 years, you’ll have paid off the entire debt, including the interest.

The first years of the mortgage are focused on paying off the interest amount; then, as the mortgage ages, you’ll end up paying the actual debt balance.

Interest Only Mortgages UK

For many, an interest only mortgage UK is a win, but they’re not as easy to get as they were a few years ago. Those who get them do so because there’s a solid plan to get the capital paid.

If you do manage to get an interest only mortgage, you’ll only focus on paying the interest amount of the debt for the entire term of the loan.

When the term ends, you’ll have only paid the interest and will be expected to pay the actual debt off in a lump sum. 

You’ll need to prove that you can build up the lump sum in some way over the mortgage term. Mortgage providers expect you to illustrate how you’ll pay off the mortgage.

Most buyers with an interest-only mortgage rely on accrued savings to cover the final lump sum, while others rely on the sale of an asset or profits from investments.

Part and Part Mortgages aka, Part Capital and Part Interest Mortgages

A part-and-part mortgage is the rarest of them all, offering buyers the opportunity to pay off part of the interest as you go and part of the capital amount as you go.

At the end of the term, there will still be a lump sum to pay, but it will be much smaller than an interest-only mortgage.

This is ideal if you have savings or an investment that can pay off a large portion of your mortgage but not all of it.

One of the perks of part and part mortgages is that they offer lower monthly installments than a repayment mortgage, and there’s less capital to settle at the end of the mortgage term than with an interest-only mortgage.

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Interest: Variable vs Fixed – What’s the Right Choice for Your Property Purchase?

Variable Rate Mortgages

To put it simply, nothing is set in stone when it comes to variable rate mortgages – the interest rate will fluctuate depending on what’s happening within the UK economy.

There are three main categories that variable rate mortgages fall into:

1. Tracker 

Tracker mortgages don’t have the same rate as the Bank of England but fluctuate along with it. For many, this provides peace of mind as only the economy can cause your interest rate to change.

2. Standard variable rates

All lenders have a standard variable rate that they can influence. This may loosely follow the movements of the Bank of England’s base rate (usually set at 2 to 5 points above the base rate).

In most instances, a borrower will be offered a reduced rate for a fixed period, and then when that period is over, they will be shifted onto the standard variable rate. 

Unfortunately, while these mortgage types are often unavoidable, they’re expensive and volatile as the lender can decide when to move its rates. There is a big plus side, though.

If you plan to pay off your mortgage earlier than agreed, there’s usually no penalty for this. First-time buyers often can’t get access to standard variable rates.

3. Discounts

Discount mortgages aren’t available to everyone, but for many, they’re attractive.

These are mortgages provided at a discounted rate from the standard variable rate, but only for a short, fixed period.

The period is usually 2 or 3 years, but some lenders offer longer options.

Discount mortgages are often advertised using industry jargon, so it’s best to make inquiries to ensure you know precisely how much you’ll be paying.

The Big Question: How to Choose Between Fixed and Variable Rates

Industry experts will tell you that there’s more to choosing a mortgage type than just looking for ones that appear to be the cheapest.

The best way to determine which option is best for you is to look at your finances and see if you’ll be able to maintain good standing on your mortgage if the interest rate hikes. 

For most, a fixed rate mortgage provides a sense of security. It gives the buyer peace of mind that they know exactly how much they will spend each month, regardless of fluctuations in interest rates.

But this can also mean losing out on a saving when the interest rate is cut or dips. 

If you can only just afford the expected installments on your mortgage, it may be advisable to fix the rate as fluctuations could put you out of pocket and over-stretch your budget in the end.

If you have a lot of additional income and can easily afford your mortgage installments with plenty to spare, you may be in a better position to think about variable rates.

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Choosing Between Incentive Periods

Mortgage providers in the UK like to keep things interesting by offering incentive periods over which time your rate is fixed or discounted.

These are not usually for the full term of your mortgage (although some lenders may offer this).

In fact, depending on the discretion of the lender, you may be able to access an incentive period between 2 and 10 years.

If you’re offered options, you may think that choosing the longest incentive term is best, but this could end up costing you unnecessary amounts in the end. 

Tips to help you decide:

• Don’t rely on the name of the mortgage to make your decision – always check the finer details. For instance, some 2-year fixed deals may end sooner than 24 months. 
• New mortgage deals come with arrangement/establishment fees, so avoid switching between deals and mortgage companies too often or your expected savings could be surpassed by fees.
• Investigate the rates on longer term fixed rates as sometimes, because of industry competitiveness, they’re on par with the shorter terms. 
• Avoid long term fixed rates if you intend to sell the property in the near future, as these mortgages may come with early settlement or similar fees that could eat into your budget.
• Even though the monthly instalment amount may seem low, always check the final cost of your total mortgage. Longer mortgage periods mean more interest – which means a more expensive mortgage in the end. 

Tracker vs Fixed Mortgages UK Conclusion

The only person who can determine the best type of mortgage for you is you, and of course, with the help of a professional mortgage broker.

While you may have insider information about your budget and affordability, the complexities of a mortgage, how they’re calculated, and how the interest works can be misleading or overwhelming.

Consulting with a mortgage broker about your options and the financial implications attached to each is a step in the right direction.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

If you’re earning a decent income but have a bad credit score or shaky credit history, does that exclude you from getting a new mortgage?

Getting a mortgage is a life goal for many people, but those with bad credit often worry that they’ll waste their time applying for a mortgage or will get a terrible rate/deal because their credit history is less than perfect.

According to Statista, mortgages account for a large portion of outstanding debt in the UK.

But planning with the help of a mortgage advisor can help you apply for a mortgage that won’t become a financial noose in the end.

The fact of the matter is that you may have a bad credit score but changed your financial situation since.

Even with a high income, your bad credit rating will remain for a certain period.

This leaves many people on high incomes still saddled with poor interest rates or limited options because of poor credit scores.

That said, you will still have options, but they’ll be impacted by how recent your financial issues have been and how severe your bad credit score is.

Depending on how extreme your situation is, you may need to approach a specialist lender that deals with bad credit mortgages or work on your credit score before applying for a mortgage once more.

Consulting with a mortgage advisor on bad credit good income mortgages can also help you to determine the best course of action for you.

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Why a Healthy Credit Record Is Important

When applying for any sort of credit, the lender will assess your credit report to determine if you’re a suitable candidate or not.

The information found on your credit report will indicate whether or not you’re a risky candidate.

Mainstream lenders will rely heavily on your credit score when determining creditworthiness.

If you have a bad credit score but a good income, using a bad credit mortgage specialist or adverse credit lender may benefit you, as they don’t assign a credit score when assessing the viability of your mortgage application.

That doesn’t mean that adverse credit lenders won’t look at your credit score, but rather that they will consider other mitigating factors, such as your current earnings and how you currently handle your accounts.

Credit records provide potential lenders with an overview of your financial history, such as the money you’ve borrowed and how you’re repaying it, accounts you have and how they’re being managed and so on.

Your credit report will include details of your car finance, personal loans, credit cards, and store accounts.

In addition to this, your credit report will include additional details such as bankruptcy or county court judgements against you.

Are There Different Types of Credit Checks?

Lenders will carry out one of two types of credit checks: soft or hard.

If you’d like a DIP (decision in principle), the lender will carry out a soft credit check.

This helps them determine how much they could lend you based on the information in your credit report.

This includes no further checks, so cannot guarantee an approved loan.

If the lender uncovers other information on you when processing the final mortgage application, you may still receive a rejection/denial. Soft credit checks aren’t visible on your credit report.

The hard credit check is more thorough and is done at some point during the mortgage application, even if a soft credit check has been done before this.

A hard credit check will appear on your credit report, and some lenders view multiple hard credit checks as a sign of a risky borrower.

Is Credit Score the Sole Deciding Factor?

You may wonder if your credit score is the only factor that will influence the outcome of your mortgage application, and the answer is no.

Lenders will look at several things when determining if you’re a suitable borrower, with credit score being just one factor.

Other influencing factors include the following:

Your Income

Lenders will want to see how much you can afford to pay out each month, which means they’ll need to see proof of income.

If you’ve got a high income but apply for a mortgage that will exhaust all your available cash flow, you can still expect to get a negative outcome.

Applying for a mortgage that your income shows you can comfortably afford is one way to avoid possible mortgage rejection.

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Your Monthly Expenses (aka, outgoings)

As important as your income is, so are your monthly expenses.

In addition to your mortgage instalment, you may have other expenses that you pay out each month, such as your vehicle instalment, insurance, daycare, household bills and services, and so on.

Lenders will compare your expenses with your income to determine the risk involved.

Source of Income

Earning sufficient income each month is one factor, but how you earn it is important, too. For instance, stability is important to lenders.

They will want to see that you can sustain your income for your contract.

If you’re employed, you can provide your payslips, or if you’re self-employed, you’ll need to provide your company’s financials along with your bank statements or latest tax returns.

History of Prior Mortgages

If you’ve had a mortgage before or currently have one, lenders will investigate to see how you handled the payments.

If your payments were on time every time, this will show on your credit report.

Any lapses in payments or bad notes on how you handle your existing or prior mortgages can work against you.

How Much You Must Earn to Get a Mortgage

There’s no set amount that any person should earn in order to qualify for a mortgage. It comes down to how much you can afford to borrow.

Lenders will consider any income amount when determining the viability of a loan application. Mainstream mortgage providers will typically provide you with between 3 and 5 times your annual income.

This is if you have good credit. If you have bad credit, you may find that lenders are only willing to offer you less, providing you with the opportunity to prove yourself.

A high income will not negate a poor credit score, but may improve your options as you can put down a higher deposit.

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What is a Bad Credit Score?

There’s no specific number that determines a high or low credit score.

That’s because every credit bureau calculates their scores differently.

Some mortgage providers that deal with adverse credit borrowers won’t score you.

As such, a credit score is a health indicator of your overall finances.

It’s a good idea to get your credit report from the leading bureaus such as TransUnion, Equifax, and Experian, so you know what mortgage providers might see when they carry out a credit check on your name.

A bad credit score will limit your options, but won’t necessarily exclude you from getting a mortgage.

Unfortunately, poor credit scores may mean lower mortgage amounts are available to you, or you’re offered a higher interest rate.

Sometimes, the lender may request a higher deposit amount to secure the deal.

Reasons for Poor Credit Scores

There are many reasons why you may have a poor credit score.

Some of these include:

• Late and missed payments on store accounts, loans, credit cards, and utility bills.
• Going into overdraft on your credit card or bank account without having an approved overdraft facility on your account.
• Using a large percentage of your available credit on your credit card.
• County court judgements against you.
• Individual voluntary arrangements that are still in progress.
• Bankruptcy that’s been active within the past 6 years.
• Multiple hard credit checks on your name, showing that you’ve been struggling with debt and have been seeking out more lines of credit.
• Being linked to a person who has bad credit, such as a marital partner who you have a mortgage or loan with.
• Incorrect information on your credit report (which can be corrected directly with the credit bureau).

How to Secure a Mortgage with Good Income but Bad Credit

There are several things you can do to secure a good deal if you have a poor credit score but a good income.

Some options include:

• Saving up a higher deposit than the standard requested amounts.
• Minimising your debt and outgoings by closing unnecessary accounts and paying down debt.
• Invest in a cheaper property to reduce the amount you need to borrow.
• Use an adverse credit mortgage provider that won’t base its decision on your credit score.
• Settle your CCJs and IVAs to clear your credit and show that you’re making an effort to get back in good financial standing.
• Ensure your accounts, loans, and lines of credit are paid in full and on time.
• Use a mortgage advisor who can ensure that you’re making sound financial decisions that are best-suited to your financial situation.

Can You Get a New Mortgage with Good Income But Bad Credit? Conclusion

Having a high income doesn’t automatically qualify you for a mortgage or the best deals, especially if you have a bad credit score.

Mainstream lenders may view your poor credit as a red flag that you don’t handle credit properly.

Working with a professional mortgage advisor can help you apply with mortgage providers most likely to assist someone with poor credit.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

According to Statista, mortgage rates increased at a record pace in 2022.

In fact, reports show that rates for 10-year fixed mortgages doubled between March and December 2022.

On June 22, 2023, the Bank of England had a base rate increase from 5% to 5.25%.

What does that mean for you and your monthly mortgage payments?

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Do Mortgage Payments Increase with the Interest Rate?

In short, yes, certain mortgages will increase when interest rates hike.

The mortgage types affected by increases in interest rates include variable and tracker mortgages.

Tracker mortgages follow the ebbs and flows of the Bank of England’s base rate.

The moment the base rate increases, a tracker mortgage will increase. Average tracker mortgages are estimated to be up by around £23.71.

Standard variable mortgages aren’t as predictable, as it’s up to the mortgage provider how they will hike their interest rates.

In most instances, they may choose to increase their interest rate, too, which could be more or less than the Bank of England’s base rate.

Industry investigations show that after the recent interest rate hike, standard variable rate mortgages have risen by around £15.14.

Fixed-rate mortgages, however, aren’t impacted by fluctuations in the Bank of England’s interest rate.

Fixed Rate Mortgages

When acquiring a fixed-rate mortgage, your interest rate is set for a specific period.

This means that your mortgage won’t increase if the Bank of England increases its base rate.

Having a fixed-rate mortgage still requires you to keep an eye on the interest rate fluctuations, though. Remember that fixed-rate mortgages only last for a certain period.

When that period is up, you may face significantly higher interest rates than your original offer.

When is the Next Expected Interest Rate Hike?

Around every 6 weeks, the Bank of England carries out reviews on the interest rate. This means that the rate is reviewed 8 times per year.

Upcoming confirmed review dates by The Bank of England (which could change without warning) include the following:

2023:

• November 2, 2023
• December 14, 2023

Generally, the Bank of England keeps inflation set at approximately 2%.

With the cost of living crisis raging, the percentage increase has been less than anticipated in the last few reviews.

Should I Remortgage Now, Just to Be Safe?

Whether you should remortgage now will depend on what your current mortgage deal is.

The current base rate is at 5.25%, and because of this, and taking your unique situation into account, there could be an opportunity to save.

Those who have fixed-rate mortgages that are due to finalise in the next few months may want to secure a new deal instead of waiting for the deal to end.

This means you will have some time to compare deals and make sure you’re taking up the best option.

For those who have a standard variable rate mortgage and want to avoid the negative impact of potential upcoming interest rate hikes, remortgaging to a fixed rate mortgage now may be a good idea.

This may give you peace of mind, knowing exactly what your upcoming costs will be for the next few years.

Consulting with a professional mortgage broker will ensure that you get sufficient advice and guidance on which mortgage options are best for you and whether you should remortgage now or let your current contract run out.

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FAQs

What is the Reason for Raising Interest Rates?

Inflation is the reason interest rates rise. The higher the inflation rates are, the more likely interest rates will increase.

Lenders will require higher interest rates to compensate for the reduced purchasing power of money that they’re paid in the future.

How Does The Bank of England Increase Interest Rates?

The Bank’s Monetary Policy Committee determines whether to raise, reduce, or keep current the interest rate.

The committee consists of 9 members who meet 8 times yearly to discuss the current interest rate and decide what to do with it.

The minutes of these meetings are always published and made public.

Who Benefits from Inflation?

Inflation can benefit both borrowers and lenders.

Regarding lenders, inflation creates a demand for increased credit, which comes with increased interest.

For borrowers, inflation enables them to pay back money worth less than when they originally accessed the money, which is beneficial.

Which Debts Should I Pay Off First During Inflation?

While all debts should be paid off according to your agreement in place with the lender, when inflation rises, it’s recommended to pay off variable-rate loans as quickly as possible as these generally have a higher interest rate.

What Are the Main Benefits of a Fixed-Rate Mortgage?

With a fixed-rate mortgage, you’ll have peace of mind knowing just how much you’ll be expected to pay towards your instalments each month.

Fixed-rate mortgages allow first-time buyers to budget for a fixed period, making buying a first property less daunting.

Also, with a fixed-rate mortgage, you’re protected from possible interest rate hikes.

What Should I Do If I Can’t Afford My Mortgage Increase?

If increases in interest rates mean that you can no longer afford your mortgage payments, you’ll need to advise your lender as soon as possible.

You can extend your mortgage’s terms or even take a payment holiday to get a bit of a breather.

You will find that your lender will work with you to devise a solution.

How Do I Calculate How Much My Mortgage Will Increase?

If you’d like to know what your mortgage will cost you with an upcoming increase, there are several online mortgage calculators that you can use.

These typically allow users to adjust the settings and parameters to calculate mortgage payments based on certain factors.

Alternatively, consulting with a professional mortgage advisor can be helpful.

Such professionals will help you understand the ins and outs of mortgages available to you and will ensure that you have a good idea of what to expect in terms of monthly mortgage instalments.

Mortgage advisors can also ensure that your application is properly prepared to help you avoid potential disappointment.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

According to the Office for National Statistics, out of 19 million families in the UK in 2022, 2.9 million of them are single parent families.

That means 2.9 million single parents are faced with deciding on living arrangements based on one salary.

As a single parent faced with growing bills and living expenses and just one salary to live on, you may think it’s impossible to get a mortgage, but this is not always the case.

With the right advice and guidance, you can apply for a mortgage and will likely get approval if you meet the lender’s requirements.

While being a single parent is challenging, it shouldn’t deter you from living a full life, complete with the home you want your children to grow up in.

One thing to be aware of is that affordability assessments apply to single parent mortgages, and without the right approach or knowing which mortgage companies to approach; it may prove challenging to meet the requirements of these checks.

Every lender has its own unique requirements, which means that some are more lenient on certain types of lenders and their requirements.

With the help of a mortgage advisor, you can find out who to approach and how to prepare your application for the best possible outcome.

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Passing Single Parent Affordability Assessments

Meeting the lender’s requirements is vitally important when applying for a mortgage as a single parent.

Single parents typically are on the back foot when it comes to affordability as they’re on a low income, have higher expenses than couples, or work part-time.

Mortgage lenders limit how much they provide, regardless of whether the application is for a single person or a joint application.

This is usually between three and five times the applicant’s annual income.

However, some lenders will reduce the amount they allow depending on how many children the applicant has.

Of course, this isn’t discriminatory but based on the expected higher outgoings of a single parent with many children. Affordability is at the heart of every approved mortgage.

That said, there is no guarantee of how a mortgage provider will respond to an application.

Some single parents who manage to keep their monthly outgoings very low may be able to apply for a higher mortgage amount than a single parent with the same number of children but a higher monthly outgoing.

An overview of your financial situation will be carried out to determine your debt-to-income ratio, which will indicate whether you can afford the mortgage you’re applying for.

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Can I Use Tax Credits or Child Benefits as Income Towards Single Parent Mortgage Applications?

If you’re a single parent, you may be on some kind of benefits and wonder if you can use these towards proving your income for your mortgage application.

Many single parents assume that benefits can’t count towards income, but they can.

In fact, adding proof of benefits and additional income can bolster your application.

Single parents can use the following as part of their proof of income:

• Tax credits
• Maintenance contributions from an ex-partner
• Child benefit payments
• Full time or part-time work income
• Universal credit

As all lenders have unique terms and restrictions, some may have “rules” on how child benefits can be used towards income.

As an example, some mortgage providers won’t allow you to use your child benefits as a form of income if you earn more than £50,000 or if your children are older than 13.

In some instances, some mortgage lenders won’t accept universal credit or tax credits as a suitable form of income.

Mortgage providers will take your income, additional income sources, credit history, and outgoings into consideration before determining if you’re a suitable candidate for a mortgage and just how much you’re eligible for if you’re approved.

Which Mortgage Types are Best Suited to Single Parents in the UK?

Of course, no mortgage provider offers a mortgage specifically for single parents.

But there are several types of mortgages that may be best suited to single parents. Some of these include:

• Shared ownership schemes – If you don’t have enough deposit to get a mortgage to cover the full cost of a home, you may reduce your spend with a shared ownership scheme. This is a type of mortgage based on a part buy, part rent basis offered by the government. Eligible applicants can buy 25% to 75% of the home from a local council or housing association.
• Guarantor loans – If a friend or close family member is willing to sign as a guarantor on your mortgage, lenders may provide a better interest rate or provide a higher mortgage amount. The risk is lessened for you, but the guarantor takes on higher risk.
• Family springboard mortgages – These mortgages generally require the applicant to pay a 0% deposit but require savings held in a savings account for five years that are at least 10% of the property’s value. After five years, the savings are returned to your family members with interest.
• Gifted deposit mortgages – Some lenders will accept a deposit that doesn’t come from your own savings if you can prove that you were gifted the money from a family member and aren’t required to repay the amount.

While these are all great options for single parents, there are many other types of mortgages available that may suit your situation better.

Chatting with a qualified mortgage advisor may help you determine which mortgage type is best suited to you.

Check Today's Best Rates >

Complexities of Applying for Single Parent Mortgages

Applying for a single parent mortgage can be complicated, especially when it comes to providing affordability.

Approaching mortgage providers individually can result in wasted time, multiple rejections, and a tarnished credit score.

To avoid approaching lenders that can’t help you in your specific scenario, it’s best to chat with a mortgage advisor.

A professional mortgage advisor can help you prepare your application and ensure you only approach mortgage providers likely to consider your application seriously.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

According to the Office for National Statistics, out of 19 million families in the UK in 2022, 2.9 million of them are single parent families.

That means 2.9 million single parents are faced with deciding on living arrangements based on one salary.

As a single parent faced with growing bills and living expenses and just one salary to live on, you may think it’s impossible to get a mortgage, but this is not always the case.

With the right advice and guidance, you can apply for a mortgage and will likely get approval if you meet the lender’s requirements.

While being a single parent is challenging, it shouldn’t deter you from living a full life, complete with the home you want your children to grow up in.

One thing to be aware of is that affordability assessments apply to single parent mortgages, and without the right approach or knowing which mortgage companies to approach; it may prove challenging to meet the requirements of these checks.

Every lender has its own unique requirements, which means that some are more lenient on certain types of lenders and their requirements.

With the help of a mortgage advisor, you can find out who to approach and how to prepare your application for the best possible outcome.

Check Today's Best Rates >

Passing Single Parent Affordability Assessments

Meeting the lender’s requirements is vitally important when applying for a mortgage as a single parent.

Single parents typically are on the back foot when it comes to affordability as they’re on a low income, have higher expenses than couples, or work part-time.

Mortgage lenders limit how much they provide, regardless of whether the application is for a single person or a joint application.

This is usually between three and five times the applicant’s annual income.

However, some lenders will reduce the amount they allow depending on how many children the applicant has.

Of course, this isn’t discriminatory but based on the expected higher outgoings of a single parent with many children. Affordability is at the heart of every approved mortgage.

That said, there is no guarantee of how a mortgage provider will respond to an application.

Some single parents who manage to keep their monthly outgoings very low may be able to apply for a higher mortgage amount than a single parent with the same number of children but a higher monthly outgoing.

An overview of your financial situation will be carried out to determine your debt-to-income ratio, which will indicate whether you can afford the mortgage you’re applying for.

Check Today's Best Rates >

Can I Use Tax Credits or Child Benefits as Income Towards Single Parent Mortgage Applications?

If you’re a single parent, you may be on some kind of benefits and wonder if you can use these towards proving your income for your mortgage application.

Many single parents assume that benefits can’t count towards income, but they can.

In fact, adding proof of benefits and additional income can bolster your application.

Single parents can use the following as part of their proof of income:

• Tax credits
• Maintenance contributions from an ex-partner
• Child benefit payments
• Full time or part-time work income
• Universal credit

As all lenders have unique terms and restrictions, some may have “rules” on how child benefits can be used towards income.

As an example, some mortgage providers won’t allow you to use your child benefits as a form of income if you earn more than £50,000 or if your children are older than 13.

In some instances, some mortgage lenders won’t accept universal credit or tax credits as a suitable form of income.

Mortgage providers will take your income, additional income sources, credit history, and outgoings into consideration before determining if you’re a suitable candidate for a mortgage and just how much you’re eligible for if you’re approved.

Which Mortgage Types are Best Suited to Single Parents in the UK?

Of course, no mortgage provider offers a mortgage specifically for single parents.

But there are several types of mortgages that may be best suited to single parents. Some of these include:

• Shared ownership schemes – If you don’t have enough deposit to get a mortgage to cover the full cost of a home, you may reduce your spend with a shared ownership scheme. This is a type of mortgage based on a part buy, part rent basis offered by the government. Eligible applicants can buy 25% to 75% of the home from a local council or housing association.
• Guarantor loans – If a friend or close family member is willing to sign as a guarantor on your mortgage, lenders may provide a better interest rate or provide a higher mortgage amount. The risk is lessened for you, but the guarantor takes on higher risk.
• Family springboard mortgages – These mortgages generally require the applicant to pay a 0% deposit but require savings held in a savings account for five years that are at least 10% of the property’s value. After five years, the savings are returned to your family members with interest.
• Gifted deposit mortgages – Some lenders will accept a deposit that doesn’t come from your own savings if you can prove that you were gifted the money from a family member and aren’t required to repay the amount.

While these are all great options for single parents, there are many other types of mortgages available that may suit your situation better.

Chatting with a qualified mortgage advisor may help you determine which mortgage type is best suited to you.

Check Today's Best Rates >

Complexities of Applying for Single Parent Mortgages

Applying for a single parent mortgage can be complicated, especially when it comes to providing affordability.

Approaching mortgage providers individually can result in wasted time, multiple rejections, and a tarnished credit score.

To avoid approaching lenders that can’t help you in your specific scenario, it’s best to chat with a mortgage advisor.

A professional mortgage advisor can help you prepare your application and ensure you only approach mortgage providers likely to consider your application seriously.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

For some, buying a home that once belonged to a serial killer is thrilling, but for obvious reasons, it’s not the ideal situation for others.

While the UK is a safe place to live, there’s no denying that we’ve had our fair share of horrific serial killers.

Jack the Ripper, Myra Hindley, and Peter Sutcliffe make for great stories unless you live next door to them at least!

The chances of knowing that you’re living next door to a serial killer are slim. It’s not like serial killers are out there, proudly boasting about their kills or plans to kill.

In fact, most people only find out there’s been a serial killer living next door or nearby when they’re caught.

That said, you may be interested to see what real estate costs in the areas where the world’s most notorious serial killers reside.

You can use Map Fact’s Serial Killers of the World map to see where well-known serial killers have lived in the United Kingdom.

If nothing else, it makes for an interesting, and somewhat chilling, visual display!

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Have Serial Killer’s Homes Been Put Up for Sale in the UK?

Yes, in fact, they have.

In 2013, Dennis Nilsen’s flat, located in Muswell Hill, North London, was put up for auction with a £100,000 discount due to the property’s history.

Nilsen is said to have murdered at least 12 men and boys.

According to the Daily Mail, Nilsen’s home was sold for £1.48 million in 2023 and is in the process of being converted into a 6-bedroom family home.

While not quite the same, one murder house at 8 Sunnybank, Helmshore, Lancashire, sold quite quickly. This is where a mother of two, Sadie Hartley, was murdered.

The house is said to have sold after news of the murder meant £50,000 was knocked off the sale price in 2016.

Also, if you live near 22 Somerset Road in Droylesden, you might find it interesting that it’s the former home of the notorious police killer Dale Cregan.

After Cregan was charged and imprisoned, the two-bedroom property was put up for auction with a guide price of £40,000 but sold for more at £71,000.

The funds from the sale were dedicated to funding police work.

In some cases, the homes of serial killers have been destroyed. Take 25 Cromwell Street in Gloucester, for example.

This was the residence of Fred and Rose West who murdered several young women and buried them in the garden and cellar prior to February 1994.

The property was acquired by the council in 1996 and instead of being put up for sale, it was razed to the ground.

Are UK Estate Agents Required to Disclose Murders at a Property to Buyers?

It might be quite the anti-climax to find the house of your dreams, sign and seal the deal, and finally move in, only to discover that 17 people were previously found buried in the garden!

When shopping around for a home to buy in the UK, you may wonder if estate agencies are legally required to inform you of any murders that happened at the property or if a serial killer lived at the property you’re interested in purchasing.

The good news is that you most likely won’t be caught off guard by moving into a home that’s previously been a murder crime scene.

Under consumer protection regulations, estate agents are duty-bound to inform buyers of any information that might affect their final decision.

And, of course, murders would fall into that category.

How Are Sale Prices of Homes Affected by Murders at the Property?

According to an article by Vice, a property that’s served as a crime scene can expect to experience a drop in sale value.

This drop is usually around 15 to 20%. In most instances, murder houses do sell, but they may take longer.

They may be snatched up by people who like to collect murder homes, but more likely by people looking to snag a deal and save on the cost of real estate.

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Can I Get a Discount on a Property That Was a Murder Scene or Home to a Serial Killer?

Here’s the reality; you can ask for a discount on any property, even those that don’t have a dark past.

But…there’s no guarantee that you’ll get a discount. The point is that it comes down to the property owner and what their lowest price is.

In some instances, if the home was a crime scene, the owner may not actually be the suspect, and they may want to offload the property at a lower-than-market-average price.

In such instances, you have a higher chance of negotiating a lower price on the property.

The best piece of advice here is that it doesn’t hurt to ask!

Getting the Best Price on a Property, Regardless of its Background

Of course, when looking into the various properties available for purchase, your focus should be on affordability and how suitable the property is to your needs, especially if you’re planning to take personal residence.

To avoid possible time-wasting and to ensure that you get the best possible rate, getting an agreement in principle might be a good step.

This will give you an idea of how much you’re likely to be granted in funding when approaching mortgage providers.

A professional mortgage advisor can assist you with the process and help you to better understand what you can afford and how to go about getting the best possible price on a property.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

According to Statista, in July 2023, the number of mortgage approvals in the UK sat at 49,000.

While this seems like many approvals, it doesn’t include the thousands of mortgage applications rejected yearly.

Most Brits feel a sense of relief and security when they receive an agreement in principle.

The benefits of an agreement in principle are two-fold, of course.

The first benefit is that you’ll know how much you can borrow, and the second is that sellers will know that you’re a serious buyer if you have an AIP in place.

Once you’ve got an AIP, you might think you’re 50% of the way there – you’ve got the financing. But the reality is that’s not always the case.

Some mortgages can still be declined after an AIP has been granted. If that happens to you, what’s the next step? Here’s what you need to know…

What is an Agreement in Principle?

An agreement in principle isn’t a guarantee but a provisional agreement between a borrower and lender.

Generally, it’s a basic understanding of how much you can borrow to purchase a property.

The idea of an AIP is so that the mortgage company has your details and has determined how much they can advance you if you meet the lender’s criteria.

The AIP will detail the amount and what the terms of the contract are.

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Reasons for a Declined Mortgage After Getting an Agreement in Principle

Lenders provide AIPs to borrowers they have the intention of providing funds to, but this is not a guarantee that the mortgage will be approved in the end.

The AIP is based on initial checks, but when the mortgage application is submitted once a property is found, more in-depth checks are carried out.

It’s at this point that mortgages can be declined.

A declined mortgage application after an AIP can be time-consuming and costly. You may even lose out on the property you want to invest in.

The best way to avoid a possible rejection after an AIP is to be as upfront as possible during the initial application.

Inform the mortgage provider about your credit score and history and any gaps you’ve had in your finances. It’s also important to check that you meet the lender’s criteria.

Mortgage applications after an AIP can be rejected for seemingly simple reasons.

For instance, perhaps there’s a spelling mistake on your application, or your employment/income has changed since the initial application.

It could also be because the lender discovers financial information about the applicant that wasn’t disclosed when applying for the AIP.

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Here’s a more in-depth look at the reasons for a declined mortgage after an AIP:

Change in Income

One of the lender’s main focuses is whether the applicant can afford to pay the capital debt and interest of the loan, which means that income is an important aspect.

Lenders are always cautious of fraud. If your initial application for the AIP states a certain income amount different to what they can verify during the referencing stages, the lender may reject the application.

Discrepancies in income can result in requests for further proof of earnings or re-application.

Employment Changes

Changing jobs can be seen as a risk factor for lenders, even if your new salary is higher than in the previous job.

This is because the longer you’re employed at one company, the more stable your income appears to a lender.

If you plan to change jobs after applying for an AIP, it’s best to inform the lender upfront.

Insufficient Deposit

If you made an initial AIP application and indicated that you have a certain amount available for the deposit, but your situation changes in the meantime, the lender may reject the application.

When applying for an agreement in principle, it’s a good idea to indicate only a deposit amount you’re certain you can afford.

Failing the Final Credit Check

Final credit checks are typically more thorough than preliminary checks, which means something may turn up on the credit check that indicates you no longer meet the lender’s criteria.

Lenders use a variety of bureaus to check credit, which means what you see on your credit profile may differ from what the lender sees in a final check.

This is a common problem for applicants who have an AIP. Common problems that may turn up on the final credit check include:

• You’ve applied for multiple forms of credit, resulting in numerous credit checks against your name. This can include credit cards, loans, store accounts, and similar. Lenders may view your debt-to-income ratio as unsuitable when acquiring additional credit cards, loans, and accounts.
• Poor credit management is also marked on your credit profile. Missing payments, paying late, or having gaps in your finances are viewed negatively by lenders.

Before applying for an AIP or mortgage, check your credit report with each of the leading bureaus (Experian, Equifax, and TransUnion).

Ensure the details are correct and update any bureaus that may have incorrect information.

If you do happen to fail the final credit check, it’s a good idea to improve your credit rating before applying again.

You can do this by:

1. Registering on the electoral roll.
2. Paying bills in full and on time.
3. Increasing your credit limit on your credit cards without spending more on your card.
4. Reducing the amount of credit you’ve utilised. Lenders prefer borrowers that use 50% or less of their available credit limit.

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What to Do If Your Mortgage is Declined After an Agreement in Principle

If you’ve got an AIP, but your final mortgage application is declined, you’re bound to feel panicked.

Rest assured that declined mortgages are common at this stage and don’t necessarily mean you’re out of options.

The first step is to slow down and consider your options. Applying for a new mortgage immediately may result in another rejection, which will appear on your credit report and negatively impact your creditworthiness.

One lender may have rejected your application, but that may be a case of being matched with the wrong lender.

Other lenders may still be happy to assist you, but you’ll need the advice and guidance of a mortgage advisor who can point you toward the right lender.

When using the services of a professional mortgage advisor, all you need to do is provide them with accurate information and let them handle the rest.

Your chances of being matched with the right lender are greatly increased, and you’re more likely to get an approved mortgage.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.