Mortgage Rates and Decisions

Applying for a mortgage can be a major event in anyone’s life, and there are several things to consider before sending off the application.

Lenders can take into account a variety of factors, both when deciding whether to accept or reject an application, and what rate to offer the applicant.

Read on to learn more about how mortgage decisions are made and the factors that determine your rate.

Mortgage Decision – Yes or No?

Lenders may look at the following when deciding whether to accept a mortgage application.

• The Application – The information you include, such as your income, will help lenders determine your chance of being accepted or declined. Ensuring your application is filled out completely and without any errors will help get a smoother, more prompt decision.
• Your Credit History – A long credit history of punctual payments can be an indicator of good financial behaviour. This may be reflected in the credit score you are given by the lender, which in turn can make it more likely your application will be successful.
• The Credit Score – Lenders create a credit score for you based on their own criteria, your credit history, and your application. This score from the lender will indicate how creditworthy they consider you.
• Your Employment Record – Being employed at your place of work for more than six months can help indicate a steady stream of income.
• The Property Type and Value – Some lenders may take into account the type and value of property you want to buy before choosing to accept your application.
• Whether You Can Afford The Mortgage – Lenders can run affordability assessments on applicants to determine whether you’ll be able to make the repayments.

Working towards a positive credit history and being financially responsible (repaying credit on time etc.) over an extended period of time can help your chances of a successfully applying for a mortgage. Learn more about the factors affecting your credit score and how to practice good credit hygiene.

Mortgage Rate Factors

If your application has been accepted, the terms of your agreement can depend on:

• Credit Score – Even if your credit score was high enough for your application to be successful, it can sometimes still have an influence on the interest rate or repayment period you are offered. A higher credit score has a better chance of being given more desirable mortgage terms.
• Deposit – The deposit you put down for a mortgage can influence the interest rate or repayment period you are offered – a higher deposit could result in a lower rate or a longer repayment period.

Being offered an attractive mortgage could reduce your financial strain significantly, but there are certain criteria you may have to meet to get the mortgage you want.

It may be useful for you to check your Equifax Credit Report and Score before applying for a mortgage. The report will show you your credit history, and the score will give you an indication of how a lender may view your creditworthiness – it’s free for the first 30 days and then £14.95 a month.