Applying for a mortgage became a more complicated procedure last April following the introduction of the Mortgage Market Review. Let’s take a look at what Belgravia estate agent, Best Gapp think about gaining approval for a mortgage…

Despite lenders doing their best to publicise this strict set of rules, many mortgage applicants are unaware of the hoops they will be forced to jump through when sourcing property finance.

The MMR aims to ensure that borrowers can afford to make their monthly mortgage repayments. It was introduced to stop banks recklessly lending to those who simply can’t afford to keep up the repayments as was the case before the financial crisis in 2008. 

As a result, lenders are now obliged to put your finances under a microscope leading to what some have described as three-hour interrogations by the mortgage company.  One major change is that rather than just declaring your income, you actually have to prove it now.

Where once lenders might have been willing to take a gamble on you, this is no longer the case. However, there are actions you can take to improve your chances of obtaining one of the very attractive mortgage deals currently available on the high street. 

Before you even think about applying for a mortgage or looking for properties, it’s worth making a start on the documentation you will have to show the mortgage lender. 

If you have any outstanding debts it’s time you got a handle on them and early repayment will work in your favour with lenders.  Take an in-depth look at your outgoings and work out where you can cut back even if it means going without a few luxuries for a while. 

You are also more likely to be taken seriously if you can show that you’ll have money left over at the end of the month. This shows that you can take care of any unexpected bill and are more likely to be able to handle a possible interest rate rise.

The introduction of the MMR has resulted in a higher number of would-be borrowers being refused a home loan. But many unsuccessful mortgage applicants are still in the dark as to why they were turned down.

In a survey by Experian, a startling 15% of those turned down actually believed that mortgage rules had relaxed since MMR and 37% didn’t realise that lenders would be more inquisitive in finding out whether they could afford the repayments. 

What is most surprising is that many people actually believe deposits have gone down in recent years.  In fact, on average, buyers have to stump up 40% of the total property’s worth.  Even on a house worth £150,000 that’s still £60,000! And, if the property you want is even a few million pounds, you’ll need a hefty deposit for sure if you want a mortgage.

When asked by Experian 25% of people felt that MMR had played a major role in their application for a mortgage being denied.  Rather worryingly of those, 11% hadn’t actually bothered to find out why they had been rejected, leaving them at a significant disadvantage when it comes to qualifying in the future. 

Ultimately, it comes down to being prepared and understanding exactly what the lenders are obliged to ask and the evidence you need to produce.