I’m a mortgage expert – here are the tricks to get a loan as lenders make it harder to get approved

HOME BUYERS might find it harder to get a mortgage as the cost of living skyrockets, but insider tricks can help you get the loan you want.

Greg Cunnington of mortgage broker LDN Finance says rising energy bills, council tax and travel costs mean lenders are now cutting the amount they lend you.

Gregg Cunnington says it's harder to get a mortgage – but not impossible

Banks use official household spending data to calculate how much a prospective homebuyer can afford to borrow and repay.

When the cost of living rises, banks usually lower the amount they lend.

Greg says: "When an energy bill goes from £100 to £300, lenders know they can play around with less money each month. This has a domino effect on how much people can borrow."

In a one-two punch, interest rates also rise, increasing repayment costs to further contain the size of mortgages for borrowers.

But Greg says insider tricks can help you borrow more to ensure you get the home you want.

Extend your mortgage term

When you take out a mortgage, you commit to having it for a certain amount of time.

Usually this is around 25 years, but it can be longer or shorter (and you can change it later).

One way homebuyers can make monthly payments more affordable, according to Greg, is to opt for a longer mortgage term.

He says: "The longer the term, the lower the monthly rate. We see many customers asking us to continue with a maximum term. It really helps first-time buyers.

"You must be working a job where you are not legally required to retire early, but anyone working in an office setting should not have a problem."

Many lenders will lend up to age 75, with some offering terms of up to 40 years.

However, borrowers need to be aware that extending the term means you will pay more interest on the mortgage in the long run.

If you have a mortgage for 25 years of 150.000 £ at 3.5%, your monthly repayments would be 751 £. And over the life of the mortgage, you would be taking into account interest payments 225.Pay back £281.

If you had the same 40 year mortgage, your monthly repayments would drop to £581, but the total amount you would repay jumps to 278.921 £.

Fix longer

Choosing a longer term fixed rate is another way to increase the size of your loan if you are comfortable with it.

Greg says: "There are a few lenders where you can borrow more if you take a fixed rate of five years or longer.

"In the current environment, people also want to lock in longer because they're worried about interest rate rises – it's a win-win situation."

A fixed rate mortgage is ideal for those who want to know exactly how much they have to repay each month.

They also protect you from interest rate increases. If you have a variable or tracker mortgage, your monthly repayments are likely to go up every time the Bank of England raises interest rates.

But those with fixed rate mortgages have their interest rate fixed for a period of time and are therefore protected from these increases.

Consider an interest rate mortgage

Buyers who want to borrow more and keep repayments low could also consider interest rate mortgages if they have a deposit or equity of at least 25%, according to Greg.

With these deals, borrowers pay back only the interest on the mortgage each month, so bills are lower.

Greg says: "There are lenders who will allow mortgages to be interest only for a period of time as long as borrowers feel the hardship, as long as they have a suitable repayment strategy in place."

But you need to have a plan for how you'll pay off the rest of the loan in the future.

These mortgages are generally only suitable for people who have saved or invested a lot of money and can therefore afford to pay off the balance of their loan.

Shopping around

Different mortgage providers have different lending criteria, so you may borrow more from some than others.

This means it's important to look across the market to maximize what you can get.

Greg says, "Different lenders specialize in different customer scenarios. You want to make sure you get the loan numbers from each lender, as they can vary widely."

For example, aspiring buyers who work overtime, receive bonuses or earn commissions might find that lenders will only consider 50% of that extra income, but others will consider everything.

A good mortgage broker can help borrowers compare lenders to find the greatest loan based on their particular circumstances.

Greg says: "Brokers have access to the decision makers at lenders, they can arrange things that clients can't do themselves."

Consultants also have relationships with little-known lenders who accept applicants when big name banks don't.

Greg says, "There are specialized lenders who can evaluate customers based on their individual affordability and not work with statistics. This is a really useful part of the market for those who don't get what they want from high street names."

Get your finances in order

If you get your finances in shape, you can also take out more loans.

Property seekers who aren't in a hurry to buy and can wait while saving a larger down payment may find it's worth it to eventually get a larger mortgage.

Greg says: "The bigger your deposit, the lower the interest rate – so lenders lend more."

At the same time, cleaning up damaged credit scores is another check for people who expect to buy in the coming years.

Greg adds, "With a clean credit score, you can access lenders that offer the most credit."

Each week, as part of our "My First Home" series, we talk to a first-time buyer, including this person who quit the job she loved to save more money for a down payment.

Elsewhere, a real estate expert reveals the four simple steps to getting rid of mold for good.

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