Aldermore, the specialist finance lender, have commissioned research which shows nearly half of all first time buyers have been rejected for a mortgage.
The survey also found that over 35% have been turned down once for a mortgage and a further 10% have been rejected more than once. The most common reason behind the rejections was given as self-employed or contract worker status. Other reasons for the rejections include poor credit history and lack of deposit funds.
In March, Aldermore carried out a first time-time buyer index which found the most common reason for rejection was applicants’ existing debts at that time. Worker status such as self-employed was the ninth most common reason for an application to be declined.
This recent survey has also shown a lack of confidence with 62% believing that purchasing a house in this climate is less achievable. In the hopes of securing a mortgage, 34% of people were looking to improve their credit score by paying off debts, paying bills on time and registering on the electoral roll while some have given up their self-employed status.
Since March, many low-deposit mortgage deals have disappeared from the market due to lenders’ concern about the potential for house prices to fall.
Jon Cooper, head of mortgage distribution at Aldermore Bank, said: “A decline for a mortgage can be a deflating experience for those looking to fulfil their dreams of home ownership. But do not despair as options for first-time buyers and the self-employed have broadened over the past decade.”
He said there has been a growth in specialist lenders who can handle more complicated applications.
Mr Cooper added: “The current generation of first-time buyers are now far more diverse, coming to the market with a wide range of financial backgrounds. But one constant is they all appear to find the process confusing and complicated and the pandemic has only heightened this.
“It may feel daunting at times so we would recommend seeking advice from a mortgage broker that can give a whole of market view and provide options specific to a new buyers’ individual circumstances.”
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