What happens when your affordability stops you from remortgaging?
When it comes to your time to remortgage, if you decide to move to a deal with a new lender you are likely going to go through an affordability check.
An affordability check is where the lender assesses whether you can afford the mortgage you’re applying for, taking into consideration your income, credit rating and employment status.
In some cases, you may not pass the affordability check, which means you are unable to remortgage.
Some of the reasons you may not pass the affordability check include the monthly repayments are higher than you can afford, a low credit rating, your home valuation has changed and now it’s worth less than your mortgage or a decrease in income.
If you don’t pass the affordability assessment, don’t panic, there are things that you can do and may be able to get another mortgage deal elsewhere as there are lots of mortgage types out there that may be more suitable for you.
Here’s what to do if this happens to you.
- Get expert advice
If you’re not already, your first step should be to speak to a mortgage adviser to get their expert advice. Mortgages can be complicated and there are a lot of routes you can explore, so it’s best to get some advice from someone experience to see what is the best option for you.
- Improve your credit score
If you were rejected due to a poor credit score, you should take some time in reviewing your rating to see where you can make some improvements before applying for another mortgage. You can see our tips on how to improve your credit score our here.
- Explore a longer-term mortgage
When you remortgage, you can change the term length of your mortgage. It may be an option to extend your mortgage longer so that you can reduce the amount of your monthly payments which could help your affordability of the deal.
- Can you overpay on your mortgage?
If you have a chunk of money sat in your savings account, it could be an option to make a lump-sum overpayment to your mortgage. What this means is that you will be reducing you loan-to-value (LTV) so that you can get access to better deals as your mortgage loan will be smaller and will be borrowing less.
- Stay with the same lender
Also often referred to as a Product Transfer, this is the process of moving to a different deal but sticking with your existing lender. Staying with the same lender usually means you might not need to go through another affordability check.
Why not check out our Sprive Academy video on mortgage affordability checks here.
