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Confused about the new lending rules? Here’s how to maximise your chances of mortgage approval

Lending rules have changed recently and you need to know whats changed to maximise your chances of getting on to the property ladder....Here's whats changed and what you need to do


The CCCFA (Credit Contracts and Consumer Finance Act) only came into force in December, and the credit crunch is already starting to bite.

The legislation aims to protect vulnerable borrowers from loan sharks and requires lenders to scrutinise applicants’ financial history more closely. However, many home loan seekers have found themselves rejected by the banks. The latest data shows the proportion of successful home loan applications has dropped from 36% to 30%.

The good news is that you can take action to improve your prospects even in a tightened lending environment. Here are some tips to give you the best chance of approval.

1. Reduce your spending now – Budget like you already have a mortgage!

Lenders will ask to see your latest three months of bank statements. Tighten your belt in the lead up to applying for a home loan. It’s the unnecessary spending that’s in the spotlight like regular dining out, takeaways, UBER eats, coffees…you may think you don’t spend a lot on these items but check your latest Bank Statement you may be surprised at how much you are spending. Start budgeting now as if you already have a mortgage!


2. Pay your bills promptly

Lenders will also check your credit history. Maximise your credit score by making prompt, regular payments on utilities, credit cards, personal loans and rent. Ideally, you should clear outstanding debts before applying for a mortgage. Be sure to cancel any credit or store cards you no longer use and consider reducing your balance limits. You can check your credit report for free at Credit Simple or Equifax.

3. Save

Now that you’ve identified your unnecessary spending – save it! The bigger your deposit, the less risky you are for lenders. Ideally, you should be aiming for a 20% deposit of the property’s value.

A healthy deposit and a strong track record of regular savings get a big tick from lenders.


4. Be Ready With your Paperwork

Make sure you don’t stumble at the last hurdle. Get together all the supporting paperwork beforehand for a smoother, faster application process. Alongside bank statements for current, savings accounts and credit cards, lenders also need proof of ID and income. Employees should have three most recent payslips. And the self-employed will need accountant-prepared financials.


Ready to talk? Contact Holly Rogers Mortgages


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