Many people in the UK believe that their financial status means that they’ll never be able to get on the housing ladder, as the prospect of getting a mortgage just seems to unrealistic. However, in many situations there are things that you can do to help turn the tables on your financial situation and work your way to getting that much sought after mortgage,
There are 5 main reasons why people are turned down for mortgages and they are:
- Low income
- Insufficient cash for a deposit
- Poor credit history
However, if any (or all) of the above describe you, then all is not necessarily lost. In this post we’ll show you how there is nearly always a way to get a mortgage.
If you’re on a low income
If the mortgage provider deems you incapable of keeping up with payments due to a low income, you might want to consider the avenue of shared ownership. With a shar
ed ownership scheme, you can buy a share of the property and pay rent on the remainder. In most cases you’ll have the chance to purchase the remainder of your home once the first share is paid off. This type of scheme is widely used and is a great way for people who wouldn’t normally be able to, to get on the property ladder.
If you don’t have enough cash for a deposit
There is one really simple answer to this one – start saving! To take out a mortgage, you’ll generally need to put down a deposit of between 5% and 10% of the sale price of the property. For some people, a Government Help to Buy scheme may be available. With these schemes, you can take a loan worth up to 20% of the value of the property if you are able to find the 5% deposit. This means that the mortgage will actually only be for 75% of the propert value.
If you have a poor credit history
Many people are affec
ted by poor credit rating for a variety of reasons, such as paying bills late or for having a County Court Judgement (CCJ) against them. However, some mortgage companies specialise in providing mortgages to people with poor credit history. You should be warned that the rate of interest is much higher, to account for the added risk from the lender, but this is an option for some people.
If you’re self-employed
If you are self-employed, you will need to prove your income to your mortgage lender and you must show evidence that you will be able to continue to make repayments for years to come. In some cases, the best option is to seek a mortgage company that specialises in giving mortgages to self-employed people. Again, their rates will often be higher, but a specialist is often the right way to go.
If you ever doubt that you’ll be able to get a mortgage, remember that there is (more than likely) always someone before you who
has managed to get a mortgage in the same situation, so it is always worth seeking professional advice.
About the Author: Thanks to James from www.fairmortgages.co.uk for sending in this post. James is a mortgage expert and contributes to a number of financial blogs.