Getting a mortgage is not always straightforward and there are some mistakes which can mean your application is often rejected
It can be tough getting onto the housing ladder(Image: Getty)
A mortgage expert has warned that a simple online shopping habit could instantly derail the chances of buying a home. Buy-now-pay-later schemes now being used by more than two thirds (70%) of Brits amid the cost of living crisis.
George Abouzolof, Senior Mortgage Advisor* at Clifton Private Finance, says while it can be “tempting” it can also be a risky option. He said: “Buy Now, Pay Later schemes may seem tempting when trying to secure a good deal, buy concert tickets, or purchase an expensive item, however, these transactions can appear on your credit report, which lenders will review during a mortgage application.
“If you regularly rely on these schemes, lenders may see it as a red flag, as it could suggest you struggle to pay for everyday items upfront due to cash flow issues. This may signal that you could be a riskier borrower who might struggle to keep up with monthly mortgage repayments, making your application more likely to be rejected.”
The warning comes as first-time buyers continue to battle rising house prices and tougher affordability checks. George says it is just one of a number of mistakes that can be enough for lenders to reject a mortgage application altogether. He has now shared other mistakes that can unknowingly that harm their chances of getting approved for a mortgage.
Regular Gambling Activity
The expert warned: “If you enjoy placing bets on horses or football scores, it’s worth being cautious, whether you’re betting online, in casinos, or in betting shops. Occasional gambling is unlikely to cause concern, however, frequent betting or gambling with larger sums of money may be viewed by lenders as risky or irresponsible spending behaviour, which could make them more cautious about approving your mortgage.
Constantly Splashing Out On Luxury Items
“We all like to treat ourselves from time to time, but consistently spending large amounts on luxury items could make lenders more cautious about offering you a loan,” warned George. He added: “If you can comfortably afford these purchases, lenders are unlikely to raise concerns. However, regularly splurging when you do not have the means to do so could raise worries about debt levels or your ability to keep up with monthly mortgage repayments.”
Recently Taking Out New Credit Cards
The expert said while credit cards can actually help demonstrate to lenders that you are a responsible borrower when they are used correctly this isn’t always the case. He advised: “How and when you use them can affect your eligibility for a mortgage.
“For example, taking out a new credit card shortly before applying for a mortgage could signal to lenders that you may not have enough income to cover your monthly outgoings. It can also negatively affect your credit score.
“If you do have a credit card, it’s important to show that you repay your balance each month and avoid opening new credit accounts close to a mortgage application where possible.
Overdraft Usage
George warned: “Consistently using your overdraft, or regularly dipping into an arranged overdraft, could affect your chances of getting a mortgage approved. It may signal to lenders that you rely on borrowed money to cover everyday expenses or that you are not closely monitoring your finances. This can make you appear to be a riskier borrower in the eyes of lenders.
Leaving a joint bank account open after separating
One of the most important steps after separating is closing the joint account. You should also ensure no shared credit products remain, explained George.
He added: “You can also file a notice of disassociation with credit reference agencies to formally remove the financial link. Leaving a joint account open can also raise questions during affordability checks if you later apply for credit or a mortgage, either on your own or with a new partner.
“There are also risks when it comes to debt. Even if one person causes the debt on a joint account, both account holders are legally responsible for covering overdrafts or unpaid fees, which can impact both of your credit scores.”
Credit score oversights
Another common mistake is not checking your credit profile early enough, he warned. He added: “Your credit score directly affects the rates and products available to you. Simple errors, like outdated addresses or missed payments, can be fixed, but only if you catch them early.”