The last few years have been a tough time for anyone trying to get on the property ladder.
The impact of the so-called mini-budget was far from ‘mini’, leading to eye-wateringly high interest rates and an unprecedented cost of living. Which has meant, for first-time buyers, securing a mortgage has become a bit like climbing Everest.
But thankfully, it seems, things are starting to improve.
According to statistics from the Bank of England (BoE), mortgage approvals for house purchases increased by 3.8% from July to August 2024 – with 64,858 applications getting the green light. Not only does this mark the third consecutive month of growth, it’s also a 43.4% increase compared to August 2023, when approvals stood at just 45,219.
Over the coming months, it’s believed this upward trend will continue.
Mortgage rates have already (mercifully) started to fall, with lenders introducing much more competitive offerings and fixed-rate mortgage deals. Which has widened the pool of potential buyers and loosened the purse strings on what people can afford.
Of course, all eyes will be on the BoE for their next decision regarding the base rate. As well as the government’s forthcoming budget and any impact this might have on buyers and sellers. But generally speaking, the outlook for the UK housing market is positive.
Remarkable progress has been made this year and, as we head towards 2025, prospective homebuyers looking to get a mortgage are in a much stronger position.
How to boost your chances of mortgage approval
Been hedging your bets, waiting for the right time to apply?
Now could be the perfect time to strike.
With more and more people being accepted by lenders, your odds of success are higher than they have been for a very long time. And to help bolster your chanceseven further, here our specialist conveyancing solicitors offer a few handy tips.
- Check your credit score…
…as soon as possible (i.e. don’t let the mortgage lender get there first).
This score is affected by any accounts you’ve had open in the past 6 months, including credit cards, loans, overdrafts, bills, ‘buy now pay later’ agreements etc. And it’s used by the lender to assess your financial situation and decide whether you can be trusted to repay the mortgage.
In the UK, three agencies are typically used – Experian, Equifax and TransUnion.
To give yourself the best possible chance of success, it’s worth checking out your report on each. This is completely free of charge. And if you do find that your score is quite low, you can correct any errors and take steps to enhance it, before it’s viewed by your chosen lender.
- Manage your available credit
It’s all about finding the sweet spot.
If you’re applying for a mortgage, it’s important to strike a good balance between not having too much credit available (as lenders might think you could rack up more debt) and not getting too close to your limits, as this suggests that you’re at the edge of your finances.
Of course, if you can pay off debt, that’s always a good idea. But if not, try to limit your credit usage as much as you can – keeping it at around 25% of your available credit.
- Boost how ‘reliable’ you look
Mortgage lenders are required to ‘stress test’ potential borrowers.
Essentially, this involves doing a number of affordability checks – which assess whether you’d still be able to afford your mortgage in the future, if interest rates were to rise.
To ensure you’re perceived as a safe bet, it’s worth tightening your belt in the months before you apply. Try to stay out of your overdraft, as this suggests you’re living from pay cheque to pay cheque. And as obvious as it may sound, always pay your bills on time. A missed payment can count against you for at least a year, and will stay on your credit report for 6 years in total.
- Delay any new credit applications
Every time you apply, the credit provider will do a ‘hard credit check’. This is registered on your file (even if you don’t take out the contract) and can have a significant negative impact on your overall credit score – making it much less likely you’re accepted for a mortgage.
Payday loans, in particular, are a big no-no.
In fact, previous research has found that a fifth of wannabe first-time buyers who had their mortgage application declined, did so because of a short-term, high-interest loan.
Ideally, you should delay any new applications for a minimum of 3-6 months.
- Get your paperwork in order
To be approved for a mortgage, there’s a lot of stuff you need to prove.
You’ll need to send a variety of documents to the lender, including proof of identity, proof of address, proof of income, proof of your deposit and much more. So if you want to maximise your chances of success the first time round, it makes sense to get your paperwork in order.
Sending everything together not only speeds up the process, but also reduces the chance of the application being reviewed by multiple people – and, as such, your chances of rejection.
- Save a little bit more for your deposit
We’re not talking a lot – just an extra £100-200 will usually do the trick.
This might seem like a negligible amount, but it can have two surprising benefits.
Firstly, it can increase the chances of getting a mortgage approved, as it no longer appears like you’re scraping together the bare minimum (i.e. 10%, 20%, 25% etc.) to secure that particular interest rate. Secondly, it can sometimes impact how much the lender is willing to offer you – potentially increasing your budget and widening your property pool.
Fancy your mortgage chances?
Due to wider economic challenges, securing a mortgage as a first-time buyer still isn’t an easy feat. But generally, more applications are now being accepted and – as we head towards 2025 – your chances of success are much more favourable than they were this time last year.
Whether you’re one of the lucky 64,858 who had their mortgage approved earlier this year, or currently preparing to apply, our team of conveyancing solicitors are on hand – ready to offer support during this exciting time and guide you step by step towards your first home.
Skilled and experienced in the buying and selling of residential property, we have significant knowledge of the conveyancing process. And will work collaboratively with you, your mortgage lender and your estate agent to make everything as quick and easy as possible.
Further details, including a list of our current fees, can be found in our Residential Conveyancing Guide. But if you have any questions, you’re more than welcome to get in touch. Please don’t hesitate to give us a call on 01744 742360. Or send an email to info@sthelenslaw.co.uk and we’ll respond to your enquiry as soon as possible.
An initial consultation with our conveyancing solicitors is also available completely free of charge, which you can request by filling out the form at the top of this page. against the NHS and your chances of success.
Get in touch today!