The first Mortgage Approval Confidence Index from unbiased.co.uk, the UK’s No.1 adviser search, reveals that homebuyers have low confidence that their mortgage will be approved, yet many are not taking any steps to remedy this.*
Out of a possible ten points, confidence among prospective homebuyers sits at 5.7 on the Mortgage Approval Confidence Index1. However, the research reveals that both confidence and success can be greatly improved through taking professional mortgage advice from an independent financial adviser, with more than eight in ten (81%) of advised applications being approved first time.**
A third (32%) of UK adults are currently planning to buy a property, but 28% of those who plan to fund their purchase with a mortgage are not confident their first application will be approved. This figure rises to 38% among first time buyers. Many lenders have recently cut their mortgage rates, which is encouraging for prospective buyers, but the research by unbiased.co.uk shows these people are pessimistic about their chances of securing a loan, yet are doing very little to address this.
The most common steps taken to improve the chances of mortgage success are checking credit rating (28%) and making a detailed analysis of all outgoings (25%), but 32% of prospective mortgage applicants say they have taken no action at all in this area. Although only 19% of prospective mortgage applicants say they have already consulted a professional financial adviser for help with their mortgage application, a further quarter (27%) say they plan to do so.
Benefits of advice
The benefits of mortgage advice are clear, as over eight in ten (81%) advised applications are approved first time. Although first time buyers are less likely than other homebuyers to seek professional mortgage advice, many apparently come to appreciate the benefits of having help with their application. Mortgage advisers say people moving home make up 37% of their client base, compared to just 26% who are first time buyers. Overall, one in five potential buyers who seek advice from a professional mortgage adviser, do so after having had their initial non-advised application rejected.**
Most common things people have done / plan to do to improve their chances of mortgage approval:
|
|
Steps taken |
Plan to do |
|
Checked my credit rating |
28% |
25% |
|
Made a detailed analysis of all my outgoings |
25% |
23% |
|
Taken active steps to improve my credit rating |
25% |
20% |
|
Researched the different mortgage providers to learn about their lending criteria |
23% |
29% |
|
Significantly reduced spending to cut down my outgoings |
22% |
26% |
|
Consulted a financial adviser to help with mortgage application |
19% |
27% |
|
Other steps to increase the chances of the mortgage application going through |
14% |
21% |
|
None of the above |
32% |
29% |
Want to buy, won’t try: women failing to take control of their finances
Men rank higher on the mortgage confidence index than women (6.0 vs. 5.3), with 66% of men stating they are confident compared to 50% of women. Men are also more likely to have taken action to improve their situation, as 73% have already taken some steps compared to just 60% of women. Only 21% of women who plan to buy a property with a mortgage say they intend to reduce their spending to increase their chances of having their application approved; 40% have not done anything at all so far, and a third (33%) say they don’t plan to take any steps to improve their chances of success.
Karen Barrett, Chief Executive of unbiased.co.uk, comments: “It’s great that so many people are looking to get on the property ladder, and the recent spate of good deals from mortgage providers means this figure is likely to rise even higher. Having a concrete goal in mind such as buying a property is a strong incentive to take charge of your finances and take stock of where you are and what you need to do. One big concern from this research is that so many people aren’t confident they’ll have a mortgage approved, and yet aren’t doing anything to increase their chances.
“Getting professional mortgage advice can make a huge difference to the process – from finding the best deal for your individual circumstances to planning specific steps to make you a more attractive candidate to a lender. Merely hoping for the best isn’t enough. The confidence that comes from having spoken to an expert can turn a potential refusal into a smooth and stress-free purchase. Our Mortgage Checklistoffers simple steps you can take to start improving your chances of success when you make your application, including the key questions you should be asking your financial adviser.”
Consumers can obtain free financial checks through unbiased.co.uk. Whole-of-market financial advisers are available for initial meetings to offer mortgage checks, as well as introductory sessions on investment,pensions, and overall financial health:
www.unbiased.co.uk/freemortgagereview
www.unbiased.co.uk/freepensioncheck
www.unbiased.co.uk/freeinvestmentcheck
www.unbiased.co.uk/freefinancialhealthcheck
For a free and confidential search for a whole-of-market financial adviser, visit www.unbiased.co.uk
ENDS
Notes to editors:
*unbiased.co.uk research conducted by Opinium Research between 13-16 February 2015, among 2,001 nationally representative UK adults aged 18+.
**Adviser research conducted among 119 unbiased.co.uk advisers, February 2015
1 Respondents who plan to buy a house / flat / apartment in the future were asked “You mentioned that you plan to buy a house/ flat/ apartment in the future. How confident are you, if at all, that the first mortgage application you make for this purchase will get approved when you do apply?”
The following answer options were given: “N/A - I do not plan to buy this house/ flat/ apartment using a mortgage”, “Not at all confident” (assigned a score of 1.25 out of 10), “Not very confident” (assigned a score of 3.75 out of 10), “Quite confident” (assigned a score of 6.25 out of 10), “Very confident” (assigned a score of 8.75 out of 10), and “Don’t know / unsure”.
Accounting for those who selected “N/A- I do not plan to buy this house/ flat/ apartment using a mortgage” and “Don’t know / unsure”, the Mortgage Approval Confidence Index was calculated by multiplying the number of respondents to the assigned scores selected, aggregating this for all assigned scores, and dividing this by the total number of applicable respondents.
For more information contact:
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Category: Homes & Property Tagged: First time buyer, mortgages
