Improving your chances of getting a mortgage

Most people are only too well aware that there is a crisis in the UK’s mortgage market, with the global credit crunch that swept across the nation last year really taking its toll on all financial sectors, especially the mortgage market.

The credit crisis has had a huge negative impact on the mortgage sector, making it more difficult and expensive for lenders to provide mortgages and for consumers to get them.

With such limited access to mortgages many consumers may find that getting the finance that they need has become difficult or even impossible in some cases.

There are a number of ways in which the mortgage sector has been negatively affected as a result of the credit crunch.

Lenders have found it increasingly difficult to get finance to fund their mortgage lending on the drying up money markets, and with the cost of inter-bank lending soaring, many have had to scale down on their lending operations due to financial constraints.

Lenders have also become increasingly cautious over how much business they will take on and who they will lend to, with many increasingly reluctant to lend to anyone that poses a risk.

As a result of these actions consumers are finding it more difficult to get a mortgage due to the tighter lending conditions in place, and many have found that the interest rates on mortgages have gone up, making it more expensive to borrow.

In addition to this many lenders are now asking huge deposits – way over the traditional 5% level – in order to access their more affordable deals, and borrowers are finding it increasingly difficult to find 95% mortgages.

Lenders have now withdrawn 100% mortgages and the once-popular 125% mortgages from the shelves, reducing choice even further and making things more difficult for first time buyers who have little or no savings to put towards a deposit.

Whilst there is little doubt that affordability and accessibility when it comes to mortgages has been affected by the credit crunch, there are steps that consumers can take to increase their chances of getting an affordable deal.

Firstly, never underestimate the power of comparison, as the cost and availability of mortgages can vary widely from one lender to another. By browsing and comparing mortgages products from a range of lenders you can really boost your chances of getting a more affordable deal.

Another tip is to use a broker if you do not feel that you have the know-how to search out an affordable deal on your own, as these specialists have access to a wide pool of mortgage lenders and will have a better idea of which lenders may be able to help you based on your needs and circumstances.

Recent reports have also shown that every so often mortgage lenders put out a great mortgage deal, but these deals are only up for grabs for a very short period of time before they are taken off the market again.

By remaining vigilant and looking out for these deals you can snap them up when they become available, and this means that you could bag yourself an affordable and suitable deal.

Reports have also shown that many lenders are reserving their best deals for those that have a larger deposit to put down, and those with only a small deposit could find themselves left with the most expensive deals and the highest rates of interest, as well as a far smaller choice of mortgage products.

If you are able to save as much as possible by way of a deposit before you apply for a mortgage you could find that your choice of mortgage products is far greater and you have access to far more affordable deals – a larger deposit can also help to reduce the amount that you repay and keep your monthly repayments down, as you will be borrowing a lower percentage of the value of your home.

One another factor that can seriously affect your chances of getting an affordable mortgage in the current financial climate is your credit rating.

If you are one of the lucky people that still have decent credit then you need to ensure that you maintain this good credit in the run up to making an application for a mortgage, and this means making timely and responsible repayments on bills and debts.

If you have damaged credit then you could suffer extreme difficulties when it comes to finding an affordable mortgage. You should consider allowing yourself time to try and repair your credit to some degree before you make a mortgage application, as any refusals could make your credit even worse.