BUDDING buyers might not know that there are certain common things that could actually stop you from getting a mortgage.
It comes as the number of mortgages approved to home buyers in September fell to the lowest level since January, the Bank of England's Money and Credit report showed.
Remortgaging approvals with different lenders also fell in September to their lowest level since January 1999.
With this in mind, it’s important to be aware of anything that could affect your chances before applying.
Not being on the electoral register, big life changes and using buy-now-pay-later can all impact lenders’ decisions.
But what else do you need to look out for? We've outlined six everyday things that can affect mortgage applications.
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Using buy now, pay later
If you use a buy now, pay later service, this will show up on your bank statement.
But be aware that some lenders may want to probe further into why you are using this to pay for goods.
They'll want to see whether you're using it because you don't have the money to pay for your shopping in one go – this could be an issue for your application.
A lender may think that you are buying things beyond your means.
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Nicholas Mendes, mortgage technical manager at broker John Charcol, said: "Lenders will usually look at your credit history before offering an agreement in principle and again when they’re underwriting your full mortgage application.
"If any new findings are uncovered in your second credit check, the lender may reject you."
The same goes for catalogue payments – where you spread payments for goods bought from a retailer over weekly or monthly instalments.
Playing bingo or the lottery
You might not know that playing bingo, or the lottery, could be a red flag to mortgage lenders.
Playing once in a while for fun, or with friends will cause no concerns, but a regular habit with larger sums would be classed as gambling, which may raise a red flag
The same goes for making regular payments to gambling sites or online casinos, which also show up on your bank statement.
It could be seen as risky spending behaviour that lenders will be cautious over – and it could mean you lose out on buying a home.
Multiple store cards
A store card works like a credit card, but you can only use it in the shop or retailer that you applied for the card from.
Interest rates for these are usually higher than for a credit card, and you'll be charged interest if you don't repay in full.
Store cards in themselves are not an issue, but if you’re struggling to clear the balance every month it could be a warning sign to the lender.
Paperwork problems
Given the amount of paperwork that's involved with applying for a mortgage, there are plenty of opportunities for errors to slip in.
This could be something as simple as a spelling mistake.
Nicholas said it could be an issue when filling out paperwork, or an administrative issue made by the mortgage lender's team.
He added: "If it's a severe issue, your application could be declined.
"As well as harmless mistakes, a lender will be looking out for any chance of foul play.
"If the lender suspects that you've lied on your application, or they have any reason to believe the application is fraudulent, it will be declined."
Money from friends and family
Usually, mortgage lenders want money from family towards a deposit to be officially declared as a gift.
Nicholas says that while lenders almost always accept personal savings or gifts from parents, there are "less preferable deposit sources".
He added: "If a lender later finds out that your deposit is a loan from parents or comes from gambling, overseas savings, friends, employers, or untraceable cash funds, your mortgage could be declined."
Changes in income
Trying to get a mortgage when you have gone through a lifestyle change can be stressful.
Lenders look at your outgoings alongside your income, so big changes to your income could impact your application.
Nicholas said: "Even if your income or outgoings have remained consistent for a period, if your circumstances change, you could be rejected.
"If your outgoings increase this could lower your possible loan size.
"If your employment has changed, even to a job with the same salary, it could suggest that your income is less certain.
"This is particularly the case if you have lots of recent employment changes.
Cash-in-hand work
If cash is the main way you get paid, be aware it could have consequences for your mortgage application.
Some lenders might decline your application because of this – even though many Brits still get paid this way.
For example, if you take on private clients as a cleaner, dog walker or tutor, you might be paid cash in hand.
But lenders might not see cash in hand as a steady income – and it could mean you get a no on your application.
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Meanwhile, one couple told us how a a "DIY Help to Buy scheme" helped them get their £466,000 first home.
Plus, another couple bought their £350k first home with the 50/50 method just two years after losing their jobs – here’s how you can too.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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