House prices are continuing to rise, despite economic uncertainty and rising interest rates.
According to a survey by Rightmove, the average price crept up by 0.9 per cent in October, even though demand from first-time buyers has dropped off by a fifth.
It would appear that many buyers are rushing to complete purchases on the back of existing mortgage offers before interest rates rise again.
The latest rise saw the average price of a property edge up to yet another new record of £371,158, according to the property website.
This was slightly below the average increase for the time of year, with the website saying prices were likely to drop in November and December as the new Prime Minister’s economic policies took effect on the market.
When applying for a mortgage in a difficult market, lenders consider numerous factors, including:
A bigger deposit
Obviously the larger the deposit, the less interest you will pay on your mortgage and the greater your chance of obtaining the loan.
A P60 form from your employer will show your pay and how much tax has been deducted for the year. A bank statement and payslips will also be required so your income and outgoings can be assessed.
Your Credit Report
Lenders use credit reports to determine whether you qualify for a loan and at what rate. Make sure you obtain a credit report to see if there are any mistakes that could negatively affect your credit
It’s a good idea to check your credit report at least six months before you plan to shop for a mortgage so you have time to find and fix any mistakes.
Cutting monthly outgoings
Lenders like to see debt-to-income ratios that are 20-40 per cent or lower, but that is not always easy to achieve. You help your chances by:
- Reducing regular monthly debt. Look carefully at your finances. Do you need to subscribe to all those TV channels?
- Increasing your income. This could entail a second, part-time job.
- Spend less generally, for instance by cutting visits to the pub, restaurants theatres and cinemas, etc.
Looking to buy or sell a home in a hurry? Want quick and effective legal advice? Speak to us.