The announcement of the Autumn Budget has sparked a surge in remortgage applications across the UK. Amidst government plans to act on inflation, it was revealed that UK mortgage holders should expect to see a significant increase in the interest rates they pay.
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How have mortgage holders reacted?
For many, the revelation that mortgage payments are likely to increase only added to existing worries around the ever-rising cost of living. Currently, the rate of inflation in the UK sits at 2.9%, and many believe that prices could soon rise to their highest levels in 30 years.
As a result of rising living costs, many homeowners are now rushing to remortgage their properties. However, Norton Finance has estimated that 10% of remortgage applicants will get turned down the first time.
Why might a remortgage application be declined?
Many are quick to blame a declined application on overly-strict lending criteria. While it is true that mortgage lenders have toughened their criteria since last year, applicants also hold responsibility for unsuccessful applications.
It is likely that your financial circumstances have changed since initially landing your existing mortgage. You may have accumulated new expenses, lowered your credit score or even started a new career. For this reason, your remortgage application may need tweaking.
Read our guide on the top financial mistakes that could hurt your mortgage application for more information.
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How can you improve your chances of remortgage success?
The experts at Norton Finance have laid out five ways homeowners can increase their chances of remortgage success. The firm has said that by following its guidelines, homeowners who have been turned down in the past can give themselves the best chances of success.
1. Check your credit report
A low credit score can reduce your chances of receiving a loan from a lender. This is because a low score typically indicates a poor ability to pay back credit debt. Many people fail to check their credit report before applying for a loan. This means that millions of applicants fall at the first hurdle, without even realising there was a problem.
You should always check your credit report before applying for a remortgage. If your credit report is low, you should learn how to improve it.
2. Fix issues before your reapply
If you have been unsuccessful in the past, it’s a good idea to take a look at your application and fix any issues that may be causing a problem.
The most common issues on a remortgage application include financial errors and paperwork problems. If you’re unsure what needs doing, perhaps seek the help of a financial adviser.
3. Avoid applying for any other loans
Mortgage lenders tend to be unimpressed by applicants who have a large number of other loans in their name.
Therefore, you should avoid applying for any other type of loan before securing your remortgage. This includes staying well away from those tempting buy now pay later schemes!
4. Review your bank statements
To secure a remortgage from a lender, your bank statements should be squeaky clean! This may require you to get rid of any unnecessary subscriptions or unneeded expenses that take money from your account each month.
You should also keep any gambling at a relatively low level. It is recommended that no more than 5% of your overall expenditure should be taken up by gambling.
5. Be honest
No matter how many times you try to hide the state of your finances, lenders will always find a way to uncover the truth. A dishonest applicant is never what lenders are looking for!
The easiest way to improve your chances of application success is to be honest from the very start of the process. Disclose your spending patterns and any debts that you may have. Covering anything up will always result in a no from the lender.
