Best Ways to Get a Mortgage: How to Boost Your Eligibility in 2024

In cake terms, the bigger the deposit, the lower the LTV ratio, i.e., the more cake you own outright and the less you're asking to borrow. If you can, have a bigger slice. It comes with a better starting position and better interest rates. It also convinces the lender you can afford the mortgage.

There are different bands in which you get different rates. Here are the typical ranges:

If your home is up to 450,000 and you're saving for a deposit, use a LISA and get a 25% top-up from the government.

While reviewing your application, lenders check how much you can borrow now, but also consider whether you can still afford your monthly mortgage repayments in the future.

This means that you need to show the lender you’ve got a tight grip on your finances. You can do this by cutting unnecessary spending for about six months before you apply. Whether it’s an expensive piece of jewellery or a cheap subscription, if it’s unnecessary or unused, it pays to cut it off.

Research the different types of mortgages, so you understand your options.

• Regular mortgages

• Guarantor mortgages

• Shared ownership mortgages

• Joint mortgages

Choose a repayment model:

• Interest-only (rare, usually for buy-to-let)

• Repayment (most offers)

And the type of rate:

• Variable (risky but flexible)

• Fixed (you pay slightly more for certainty)

Choose the appropriate term

Make sure you align the mortgage term, or how long until you pay off your mortgage, to your financial goals.

Find the balance between affordable monthly payments and how much you pay overall: due to compound interest (or interest on interest), longer terms mean lower monthly repayments, but more expensive mortgages overall.

If you're choosing a fixed term, make sure you don't intend to move during the time or you might pay an expensive fee unless your mortgage is portable to a new property.

The market is filled with mortgage deals of different types, rates, and requirements. Mortgage brokers can scan the whole market and are able to give you proper advice. However, not all mortgage brokers are the same.

The broker you need should be independent, FCA regulated, and usually the whole of the market. Before you hire one, ask them for the list of lenders they work with to confirm that you are getting the widest offer.

Missing documentation can stall your mortgage application. So get all the things you need on time – here are the basics:

• Proof of identity - Driver’s licence or ID

• Proof of address - Utility bills

• Bank statements (three to six months)

• Evidence of deposit

Proof of income:

• 2 years’ worth of tax year overviews and tax calculations for self-employed

• Contracts if you're a contractor

• Payslips for employees

For interest-only mortgages:

• Documentation proving your repayment strategy

An agreement in principle is not an actual application but more of a test: the lender reviews your income and sometimes credit history and tells you if it would offer you a mortgage. This doesn’t affect your credit rating as the lender performs a soft credit check. However, it may help you get property viewings as a positive answer might be reassuring to sellers.

An AIP is not binding in any way and both you and the lender can change your minds. Also, it can be done online and takes no more than 20 minutes.

One of the first things you need to do is check your credit report to see if there is anything you can improve before you move on with the process.

Check your credit report with all of the three credit reference agencies (Experian, Equifax, and TransUnion). Checking your credit rating won’t affect your credit score.

However, checking your credit report may help you find any unpaid debt or any areas in which you could improve your credit. The report will have repayment information on everything in the last six years.

It’s not just about getting accepted — good credit could save you a ton of money as it can get you better deals. Here are the main tips:

• Avoid credit applications at least three to six months before: Each credit application requires the lender to perform a hard search, which then shows on your report – having too many of them isn’t a great look.

• Pay everything on time: Even a missed utility payment could come back to bite you for more than a year after it happens.

• Stay within your credit limits: Experian recommends keeping your balances at 25% or less of your limit.

• Avoid overdraft: The way you use overdraft signals whether you can or cannot afford a mortgage. Using your overdraft at all in the three months prior to your mortgage application is a no in some lenders’ books.

• Hold off on subsequent applications if you’ve been rejected: Remember that every credit application comes with a hard check and shows up on your file. It applies to mortgages, too. So if one lender rejected your application, ask them about the reasons and go through your credit report again.

Keeping a job for at least six months before you apply for a mortgage shows that you’re reliable and have a stable source of income. Some lenders may also require you to stay at the same job for at least three years.

Even if your new job pays more, the fact that it’s new may create a problem for your mortgage application. It’s something you should pay attention to even when you remortgage. Finally, if your application is already underway, you will need to let the lender know about the change.

Mortgage lenders check the electoral register any time you apply for credit (including mortgages) to confirm your identity and address. You can contact your local council's Electoral Registration Office to find out if you’re already registered.

Some mortgages let you apply with other people (or their help), leaving you with a better starting position. Here’s what they are and how they work:

• Guarantor: A guarantor can help convince lenders to give you a mortgage deal by vouching for your payments with their savings or other assets. They only pay if you cannot.

• Joint mortgage: The combined income of usually two people lets you borrow more. They own the property together.

• JBSP: Joint borrower, sole proprietor mortgages let you use the joint income for calculations. Both borrowers have to pay the mortgage, and only one owns the property.

• Family springboard: Uses family savings to help usually first-time buyers obtain or increase their mortgage. Family savings are kept in an account earning interest for a set period after which they are returned.

Here’s another argument for using a broker: if you need a bigger mortgage, they could find you a mortgage lender that considers additional forms of income when doing the calculations.

The extra income might refer to bonuses, commissions, investments, pensions, benefits, working tax income or additional freelance income.

However, they might not consider 100% of these types of income.

A lifetime mortgage involves taking out a mortgage on your main residence that lets you keep ownership of the house. However, once you pass away or move into care, the house is sold and the proceeds are used to repay the loan.

So if you’re considering buying a second home and are over the age of 55, lifetime mortgage equity release (drawing out cash from your home) is one option.

Be careful as lifetime mortgages can be more expensive than ordinary mortgages.

If you already own a home you could remortgage, doing so could help you release funds to help you increase your deposit and let you access a better mortgage.

On one hand, at this age, you may have the advantage of a bigger deposit or property you can use as security when applying for a mortgage. On the other, as you approach retirement, lenders view you as higher risk as your income may drop in retirement or you may face additional health risks.

While conditions vary by lender, all lenders have to follow Mortgage Market Review (MMR) affordability rules that lead to stricter requirements for older borrowers (among others).

As you see, you can still get approved for a regular mortgage well over the age of 50. However, due to stricter rules, you may need to shop around more or reassess your terms.

For example, in many cases, you may have better chances of opting for a shorter mortgage term.

Another option is to look into smaller banks or building societies, as they may be more willing to lend to older borrowers.

Excited about paying for your own home instead of rent? Who wouldn't be? Still, don’t rush the process as it may cost you more than you expected.

First, check if you are eligible for any government schemes and if they work for you:

• LISA: Receive up to £1,000 a year in bonuses on your savings account and get a bigger deposit.

• Shared ownership: You buy a part of the property and pay rent on the rest.

• Right to Buy: If you’re a tenant in council housing, you may get a discount on buying the house.

• Help to Build: A government-backed loan that covers a part of your building costs. It works only with self-build mortgages.

If you have missed, late or defaulted payments, have very little credit history, or a trace of applying for credit too frequently, most lenders will consider you a higher-risk borrower.

Things that may help:

• Improving your credit score as much as possible and regularly reviewing your credit report.

• Adding a notice of correction to your credit report to explain your previous financial issues.

• Applying for a guarantor mortgage.

• Being registered to vote.

• Consulting a mortgage broker.

In most lenders’ books, you’re self-employed if you are:

• A freelancer

• A contractor

• A sole trader

• A director or partner in a limited company

Although you may need more preparation than an employee, you should have no problem getting a mortgage as long as you meet the eligibility criteria.

However, there are still things that may help:

• Having a certified accountant: It’s a requirement for some lenders,

• Steering clear of non-standard properties: Old buildings or places built out of unusual materials often require specialist lenders,

• Using a niche lender: It may reduce your chances of getting rejected,

• Looking into a mortgage for professionals: This may include medical, general, IT professionals, or key workers,

• Using a mortgage broker: You may get access to much better deals.

Not all county court judgements are the same. The effect of a CCJ will depend on the following:

• How many there are,

• How big the amount was,

• How long ago the CCJ was,

• Its status,

• Your current credit report.

While a CCJ can make getting a mortgage much more difficult, if you are in a position to purchase a home, it is still possible.

If you’re buying a second home, or have another mortgage with an ex-partner, it may be more difficult to get another mortgage.

However, this is what you can do:

• Meet income criteria,

• Have 10% equity or more (up to 35% for some lenders),

• Have excellent credit history.

Best way to get a second charge mortgage

Second-charge mortgages are more difficult to obtain. You need to:

• Meet strict affordability criteria,

• Have excellent credit,

• Find a second charge mortgage broker,

• Have 20 to 30% equity in your home after adding up your mortgage balance and your new loan.

100% mortgages are rare, but they are making their way back on the market. You should consider different types of mortgages:

• Family offset,

• JBSP mortgages,

• Government schemes (Shared Ownership, Right to Buy, Help to Buy until March 2025 if you live in Wales),

• Joint mortgages.

You will likely need a guarantor to apply for a 100% mortgage. However, as they are more expensive compared to other types of mortgages, you should make sure you can afford the mortgage.

Also, consider all credit history, income, and employment requirements are going to be harsher and prepare accordingly.

Mind that there is a risk of getting into negative equity if the value of your property falls.

A commercial mortgage can help you improve your business or purchase another one. The best way to get a business mortgage is preparation and saving:

• Saving for a deposit between 20% and 40%,

• Applying once you’ve been in business for a while, as this is considered lower risk,

• Being able to rent out a part of your property to businesses can also help you increase your projected income,

• Having documentation such as historic accounts, performance and projected figures,

• Speaking to a specialist mortgage broker.

Getting a buy-to-let mortgage means considering your future rental income as a part of the equation. When getting a buy-to-let mortgage, here are some things to consider:

• Preparing a contingency fund in advance in case you don’t get tenants or have unplanned expenses,

• Saving for a large deposit (usually 25%),

• Estimate rental yield in advance: annual rental income as a percentage of the property’s value,

• Choose your location wisely as it will affect your affordability,

• Choose between interest-only and repayment.

Let’s break down the process of applying for a mortgage:

• Save for a deposit,

• Check your credit score,

• Check if you qualify for a government scheme,

• Improve your credit if you need to,

• Calculate how much you can afford to borrow (don’t forget the fees),

• Prepare the paperwork,

• Check your eligibility online,

• Hire a regulated mortgage broker,

• Choose the right type of mortgage and term,

• Get an agreement in principle,

• Apply for a mortgage.

Lenders have different criteria and score applications in different ways — but there is an underlying similarity to the process. Here are the main factors lenders look at:

• How much you’re looking to borrow: A quick calculation would be 4.5 times your annual income.

• Deposit or LTV ratio: The bigger the deposit, the better your chances of getting a mortgage (and a good deal). There are also more deals for lower LTV ratios.

• Your credit: Having a good rating and history, with as few debts as possible.

• Your employment status: There are different criteria for contractors, full-time employees, and self-employed people.

• Your income and expenses: The bank will evaluate them to see whether you can afford the mortgage.

• The lender’s own policy: This may include things like age requirements or the type of income it would consider.

Here are some obstacles you may face when applying for a mortgage:

• Too much debt,

• Poor spending habits,

• Little or no credit history,

• Bad credit,

• Payday loans,

• Not being on the electoral registry,

• Too many credit applications,

• Having a CCJ,

• Application and administration errors,

• Not fitting the specific lender’s policy.