Getting together all the documents you need for a mortgage application can be stressful enough, but there may be some spending habits that you don’t realise could scupper your chances of getting a home loan.
Traditionally when you apply for a mortgage, explained The Times Money Mentor, lenders carry out affordability checks and “scrutinise your bank statements” to make sure you can repay the debt.
Many prospective borrowers are “well versed in the basics”, said Trinity Financial, such as saving for a deposit, maintaining a good credit score and having a reliable income.
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But there are some “rather unexpected, even weird, pitfalls”, added the broker, that could “derail your application”.
Here are some unexpected barriers that mortgage brokers have come across.
Not registered to vote
This is a particularly important issue, given the general election is fast approaching. Whether you choose to vote or not, being registered could be a make-or-break point.
Potential borrowers “need to be on the electoral register”, said MoneyHelper, so lenders can confirm who you are and where you live.
Gambling
Placing a bet on the Grand National or Euro 2024 may seem “harmless”, said The Telegraph, but mortgage brokers are “increasingly seeing issues raised when it comes to gambling”.
Lenders will have their own criteria and some may be more strict than others, said the Mortgage Advice Bureau, but it may be more tricky “if you gamble frequently or with large amounts”, raising concerns about your financial stability and reliability.
Buy Now Pay Later
Buy Now Pay Later (BNPL) schemes have become popular among shoppers, said Green Mortgages, providing different ways to pay, and “sometimes not asking for any repayment until a few months later”.
Some lenders may view using BNPL as a evidence of a “responsible mortgage borrower” but others may see it as a “sign of financial stress” and be reluctant to lend the amount you want or anything at all.
Joke payment references
It may seem funny to write joke descriptions for money transfers to your friends, said Tyla, but “silly bank references” could “delay the process of your mortgage application”.
Labelling payments with words like drugs or even swear words, explained FTAdviser, “could raise questions from lenders”.
Cryptocurrency
If you were “one of the lucky ones” who rode the cryptocurrency bull market wave, you may not be so lucky if you’re using the profits for your mortgage, warned The Times Money Mentor.
Due to concerns about criminals and money laundering, lenders may turn down money from cryptocurrency profits, said the financial website. Policies will differ depending on the lender, “so it’s worth checking ahead of time”.
You can’t use the cryptocurrency itself, but you can use cryptocurrency profits once they’ve been converted into sterling.
Finding a lender who accepts cryptocurrencies “isn’t straightforward”, said OnlineMortgageAdvisor, and you may need a broker to help.
Your online presence is often as important as your financial viability when it comes to a mortgage.
When preparing for a mortgage application, “it’s best to be careful” about what comes up about you on websites such as Google, Facebook or LinkedIn, warned MoneySavingExpert.
Social media posts that portray you in a negative light such as “boasts about tax evasion, criminal activity, political exposure and other forms of bad press”, could give lenders the jitters.
