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The Mortgage Guide: Finalising the offer price

Once the survey is complete you may want to go back and renegotiate the price of your new home. There are two reasons for this:

  1. The lender may value the property at a lower price leaving you with a shortfall, meaning you won't be able to match the asking price or what you originally intended to offer.
  2. Your survey may uncover problems with the property that will be expensive to fix. You can use this information to ask for a reduction in price.

It's this stage in the process that is often most stressful. Delays and problems can arise from a variety of situations, such as:

  • The seller withdraws the property from the market
  • The seller accepts a higher offer from another buyer (known as 'gazumping')
  • Your mortgage application is rejected

Communication is important when things go wrong

When problems crop up, it's worth making the effort to stay in touch with the seller via your solicitor and estate agent. It's often possible to rescue the situation by keeping the lines of communication open.

Finalising your mortgage

If everything has gone according to plan, contact your lender or mortgage adviser to proceed. There is often a fee, usually called an arrangement fee, to set up the mortgage.

This can be added to your mortgage, but if you choose this option bear in mind you'll pay interest on it for the length of the mortgage. Typical cost: £0- £2,000.

Your mortgage lender must give you at least 7 days, once a binding mortgage offer has been made to think about if this is the right mortgage for you. You can use this time to compare this offer with other mortgages.

If you're sure that this is the right mortgage for you, you can let them know sooner that you want to go ahead.

Why some mortgage applications are declined and what to do next

If your mortgage application has been declined, it's important to look over what you can do to improve your chances for next time. But don't rush off to another lender as each application could show up on your credit file. Use the checklist below to see why your application might have been turned down and what you can do to increase your chances next time.

Common reasons for a declined application and what to do

Poor credit history

Check your credit file with the credit reference agencies (Experian, Equifax and CallCredit) to see what information they have about you. If any of the information on your credit report is wrong, you can correct it.

Not registered to vote

You need to be on the electoral register at your current address so lenders can confirm who you are and where you live. It's quick and easy to do online or through your local council.

Too many credit applications (too much debt)

When you apply for credit, the lender will search your credit report to check your suitability. Most searches are recorded, leaving a footprint on your credit history. Repeatedly applying for credit makes it look like you have problems, so try to avoid taking out new credit deals three to six months before you want a mortgage.

Payday loans

Any payday loan you've had since 2011 will be listed on your file, even if you've paid it off on time. It is still counted against you as lenders may think you won't be able to cope with the financial responsibility of having a mortgage.

Administration errors

Lenders aren't perfect. Many of them put the details from your application into a computer so you may have failed because of a mistake. Ask for an interview to discuss your application.

Not matching the lender's profile

Some lenders prefer to lend to a specific demographic. An independent mortgage adviser has experience of the market and a better idea of the type of borrower that lenders want.

Other reasons you can have difficulties

Did You Know?

Three out of four borrowers are accepted for a mortgage (Source: Intermediary Mortgage Lenders Association)

If you're self-employed or a contract worker

You have to prove you have a steady income by showing tax statements and business accounts for at least the last two to three years. You might also have to prove you have work secured for the future - but that is a decision that will vary from lender to lender.

If you've lived in the UK for less than three years

Most lenders are unwilling to lend to new arrivals, but not all. You'll need to show your employment contract and a visa, which proves you have permission to live and work in the UK.

Where to go for help

A professional mortgage broker or independent financial adviser who specialises in mortgages will have regular dealings with a wide selection of lenders. They will be aware of what different lenders require before offering a mortgage, and will speak to the lender on your behalf.

Be Sure

It is better to pull out rather than risk buying a property, which may cost you more than you can afford in the long run.

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