While mortgage market uncertainty persists and interest rates climb higher, mortgage applicants may be questioning their chances of bagging an affordable deal.
Anticipation is stirring for further Bank of England Base Rate hikes, which is resulting in more lenders pulling deals and revising their rates. According to Uswitch’s mortgage expert Kellie Steed, just 4686 deals were available at the beginning of this week.
Ms Steed said: “This is the smallest number of deals available since March 14, when there were just 68 fewer, as 4618.”
She added: “There also continues to be an upwards trend in the price of the average two and five-year fixed mortgages, which are 5.64 percent and 5.15 percent respectively at 75 percent Loan-to-Value.”
It’s unsurprising that, according to Norton Finance, searches for “Should I remortgage now” are up 400 percent compared to last year.
READ MORE: House price crash is just getting started and market will fall for FIVE years
As headline mortgage rates are predicted to hit their peak later this year, Norton Finance mortgage expert Mel Whiting has shared how people can improve their chances of getting the “best” mortgage deal.
Ms Whiting said: “Lenders’ main concern is affordability. They ask if a customer can comfortably afford their repayments. Thanks to the cost of living increases, lenders have become quite strict around this area.”
Ms Whiting explained that now, some lenders will look at a person’s actual expenditure and bank accounts to do this, whereas previously, they’ll have used The Office for National Statistics (ONS) data to make predictions. This makes it important for people to organise their finances correctly to further increase appeal to lenders.
Ms Whiting said: “Prove your income and get organised. Always keep records and declare all sources of income, whether you’re employed or self-employed. One of the documents you’ll be asked for is the SA302, which shows all declared income.”
Secondly, Ms Whiting suggested people live within their means and “avoid” being overdrawn.
She explained: “Lenders look unfavourably on customers using overdrafts. They also look at what you’re spending on if you’re overdrawn. High expenditure on takeaways and entertainment for example, so it’s advisable to keep that type of spending to a sensible level.
“Gambling is always an issue if excessive, so keep this to an absolute minimum if the goal is to apply for a mortgage or remortgage.”
Another imperative for securing a good mortgage deal is to have a good credit rating. Ms Whiting said: “The best way to improve your credit rating is to make sure all debts are paid in full and on time. Make sure you don’t go over any of your credit limits and keep the number of lines of credit (i.e., the number of accounts you have) to a minimum.”
She added: “Ensure all utilities are paid on time, and that you’re registered correctly on the electoral roll as this also improves your credit rating.”
Another tip to secure a better rate is to opt for a low LTV ratio. Ms Whiting explained: “There’s no golden amount, but generally less than 80 percent will help secure the best rates. While we’re seeing some lenders begin to offer 100 percent mortgages, typically the very most lenders will look at is 95 percent.”
Finally, Ms Whiting suggested people ensure they have a regular income. While she added that this may be “easier said than done” if you’re self-employed, this still remains one of the key aspects lenders look for.
Paul Stringer, director of Norton Finance added that the mortgage market is “still buoyant”, and banks still want to lend.
Mr Stringer said: “We’re seeing more stabilised interest rates on offer and large numbers of homeowners benefiting from remortgaging their properties, despite the recent interest rate increases.”
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