Debunk common mortgage myths with The Levels Financial. Find out the truth behind, poor credit scores, applying for mortgages when pregnant and more, including:
- Poor credit score means you can’t get a mortgage
- Your mortgage application will be refused if you’re in debt
- Mortgages have an age cap
- Buy to let mortgages are only available for people with a high income
- Can’t get a mortgage when self-employed
- You can’t pay your mortgage off early
- If you’re pregnant, you can’t get a mortgage
Can You Get a Mortgage With A Poor Credit Score?
While it is best practice to try and improve your credit score before applying for a mortgage, you can get a mortgage with poor and even bad credit scores.
Depending on your credit score rating will determine the mortgage options available to you; some may include high-interest rates and fees. However, some lenders have specifically designed mortgages for those with bad credit scores.
So whether you’re a first time buyer looking for your first home, or looking at moving homes, while having a good credit score is optimal, it’s not a necessity when applying for a mortgage.
What Is A Credit Score?
A credit score is a numerical rating given to a person based on the analysis of their credit files, to indicate their creditworthiness. Essentially, a credit score is designed so lenders can estimate the likelihood of you paying back a loan in regular instalments.
What Is A Good Credit Score*?
| Credit Score (Between 0 and 999) | Credit Score Type |
|---|---|
| Between 881 and 960 | Good Credit |
| Between 721 and 880 | Fair/ Average Credit |
| Between 561 and 720 | Poor Credit |
| Between 0 – 560 | Very Poor Credit |
For more information about credit scores, see our blog posts:
- 5 ways to boost your credit score with our Yeovil mortgage advisors
- What can affect your credit score?
*Please note, that depending on the credit score system you use, credit scores and averages may differ. If you’re unsure, speak to one of our mortgage advisors.
Will My Mortgage Application Be Refused If I’m In Debt?
While being in debt when applying for a mortgage isn’t recommended, we understand that sometimes it’s inevitable. The good news? Being in debt doesn’t prevent you from applying and potentially being accepted for a mortgage.
Debts can take various forms and having debt doesn’t always mean that your mortgage application will be refused. Debt can include things like:
- Student loans
- Credit cards
- Car Finance
- Mobile phone contracts
- Bankruptcy
- CCJs (County Court Judgements)
- IVAs (Individual Voluntary Arrangements)
- Bank Loans
For more information, or to see if your debts would hinder your mortgage applications, speak to one of our mortgage advisors who will be happy to help.
Or see our blog posts for more information:
- 6 reasons why your mortgage application was refused
- Mortgage broker tips on managing Karna’s new policy – covering if Klarna will affect your mortgage application
Am I Too Old To Apply For A Mortgage?
There is no legal limit on the maximum age you can be to apply for a mortgage. However, to protect their investment, lenders can impose their own rules and add limitations on mortgage applicants’ ages. For example, some lenders will impose a cap on applicants between the ages of 65 and 80.
Typically, the older you are when applying for a mortgage, the more likely it is that you may have higher repayment brackets and shorter fixed mortgage terms. For example, the loan would need to be repaired over a short term, i.e. 20 years rather than 30 years.
Getting a mortgage approved is normally tied to various factors, this includes your financial circumstances and whether you’re able to commit to regular repayments. Those in an older age bracket, 65+ tend to be retired and may not have the means to make regular repayments.
Is there a minimum age for mortgage applications
The minimum age for taking out a mortgage is usually between 18 and 21 depending on the lender and the individual’s financial situation.
Can I Get A Buy To Let If I Don’t Have A High Income?
If you’re looking to purchase a buy to let property, it may be comforting to hear that there is no minimum income for a buy to let mortgage. Most mortgage lenders will ask for proof of earnings (outside of rental income) which equates to around £25,000 a year. However, if you earn less, some lenders may have a mortgage designed for you.
However, when applying for a buy to let mortgage, you will need to have proof of the following:
- Proof of earnings
- Proof of identity
- Proof of address
- Proof of deposit – minimum deposit of 25% of the property value, although this can vary between 20-40% depending on your lender
For more information, contact our team of advisors or see our blog post: ‘Buy to let mortgages your questions answered’.
I’m Self-Employed – Can I Get A Mortgage?
Self-employed and wanting to buy your own home? You’ll be pleased to hear that you can apply for a mortgage when self-employed. There is also no minimum amount of time that you need to be self-employed before applying for a mortgage.
Lenders will view you as self-employed if you own more than 20-25% of a business which contributes to your main income.
Regardless of how long you’ve been self-employed, lenders will want to see clear evidence of your financial circumstances including:
- Proof of savings
- Proof of deposit
- Proof of earnings
- Two or more years of certified accounts – however, some lenders may accept fewer years if accounts
In summary, if you’re self-employed and have all of the relevant documentation and finances, you should be able to get a mortgage. For more information, see our blog post, ‘Your self-employed mortgage guide’.
Can You Pay Your Mortgage Off Early?
Depending on your mortgage type, you can overpay your mortgage repayments and pay off your mortgage early if you’re able. However, depending on your deal, you may incur early repayment charges if you pay your mortgage off early.
Before you start to overpay on your mortgage repayments, we recommend you check your terms and conditions to see if you can overpay. For more information about UK mortgages, see our blog posts:
- A complete guide to UK mortgage types
- A guide to shared ownership mortgages
- A guide on how mortgages work with our mortgage advisors Yeovil
- All you need to know about track record mortgages
- All you need to know about variable rate mortgages
Can You Get A Mortgage When Pregnant?
Mortgage lenders are not allowed to refuse your mortgage application if you’re pregnant or on maternity leave, thanks to the 2010 Equality Act. However, being pregnant or on maternity leave when applying for a mortgage can cause lenders to be concerned about your financial circumstances.
Lenders are concerned about protecting their investments. If they feel that you won’t be able to afford your mortgage repayments, they may request additional information and proof of earnings. While it may be a little more complicated to get a mortgage whilst pregnant or on maternity leave, it is possible.
For more information about maternity leave and mortgages, see our blog post: ‘maternity leave mortgage application FAQs’.
Need Help With Your Mortgage Application? Contact The Levels Financial’s, Yeovil Mortgage Team
At The Levels Financial, we understand that applying for a mortgage can be tricky, especially if you have additional hoops to jump through, if you’re older, pregnant or self-employed, for example.
This is why our team of award-winning mortgage advisors are highly experienced and qualified to help with a wide range of mortgage applications and have access to over 12,000 mortgages from 70 lenders. So no matter your circumstances, we can work with you to find the right mortgage for you.
See how we can help you by contacting us today by emailing us at admin@thelevelsfinancial.co.uk or calling us on 01458 772040 to arrange your free initial consultation.
Important information:
- You may have to pay an early repayment charge to your existing lender if you remortgage.
- If you do not keep up with your mortgage repayments your home may be repossessed.
- A fee may be included for mortgage advice. The actual mortgage amount you pay will differ depending on your circumstances.
- Fees can be up to 1%, but typically a fee is 0.3% of the borrowed amount.
- There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
