If you have worked hard and saved enough money to buy a home, don’t waste your chances of getting it by making these common mortgage mistakes.
You may not realize that in some cases buying a lottery ticket can be a red flag for lenders – we explain why and how to avoid five other purchase mistakes.
It is important to take time to apply for your mortgage, as lenders will scrutinize your finances to see if you can afford the payments.
This is especially important for buyers at the moment, as the cost of the life crisis is driving up the prices of energy bills, groceries and more.
According to the latest figures, inflation has reached 5.5%, and is expected to cross 7% in April – and as a result, interest rates will continue to rise.
Every time an interest rate is raised, anyone with a tracker or variable mortgage rate sees an increase in their monthly payments.
This means that experts estimate that families may have to pay an additional, 5,400 a year on their mortgages.
That means you’ll want to make sure your loan application is as easy as possible, says wealth management firm Quelter Mortgage expert Charlotte Nixon.
Nixon says emerging buyers will not want their mortgage application to be stopped because of their numerous mistakes.
This could mean that the house you are offering slips off your fingers if the mistakes are serious enough to prevent lenders from lending to you.
She explains what you need to know to get a mortgage deal without much hassle.
Red lottery ticket flags
Winning the lottery is something that many people dream of.
Many families have a national lottery account and pay their tickets via direct debit so they don’t miss out on the lottery.
But you may not know that if you are applying for a mortgage, this regular repayment can be a hassle for lenders.
“Fluttering here or there will not result in you not getting a mortgage, but if you are accumulating a large amount of your salary each month through direct debit on the lottery or gambling app, you will know that Lenders seem less favorable. At your request, “says Nixon.
“They will be concerned about your ultimate ability to pay off your home loan.
“It’s worth re-examining whether you really need this direct debit setup if you want to apply for a mortgage.”
Buy now, pay attention later.
If you use the Buy Now, Pay Later services, it may lead your lender to investigate your finances more thoroughly when you are applying for a mortgage.
This is when purchases made using this service are set to appear on credit reports for the first time – which means lenders will be able to see the borrower.
Nixon says: “This could potentially be seen as a red flag by lenders – they may think you don’t have the funds to pay it off and you’re living out of your own resources. Are
“That means they may think there are potential challenges with your application.
“You may not want to use this service within the time of applying for a mortgage.”
Don’t lend to friends.
If money is scarce for your colleagues and they have asked for help, you can think twice before transferring any money.
While this may be a generous offer, it can be a problem when it comes to your mortgage application.
“It may raise concerns about whether you are financially responsible for your money,” Nixon said.
“If you lend too much, you should consider not using internet banking to repay the money, as it will be included in your bank statement.”
Car finance issues
Drivers who want to take home should know that if they have taken out car finance, they may struggle to get a loan in some cases.
Car finance makes it much cheaper to buy a used or new car by allowing you to pay in monthly installments.
But, like most credits, it can affect the deal lenders offer you, Nixon says.
“Borrowing using a traditional car finance loan or PCP contract can reduce the amount the lender is willing to lend you.
“So it’s wise to consider the possibility of borrowing more to buy a shiny car or a new home.”
Wrong pay reduction
When applying for a mortgage, you’ll need to include everything you’ve earned, and that means bonuses and overtime. .
If you don’t put it down, providers can’t figure out exactly what they can lend you – and you may not be offered anything.
“It may be easier to keep your basic salary on your mortgage application only, when in fact you get a lot more each year from overtime or an increase in your annual salary and as a result it can be rejected. The lender checks your paycheck, “says Nixon.
Another mortgage expert has revealed how you can repay your home loan early – but not for everyone.
These six banks offer mortgage rates every week – here’s how you can avoid hundreds of additional payments.
We explain that you can get a mortgage if you are on universal credit or state pension benefits.
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