A new survey reveals the uphill struggle first time buyers appear to be having in securing a mortgage.
A study of 1,000 prospective first time buyers by Aldermore Bank reveals that 35 per cent have been rejected once for a mortgage, and a further 10 per cent have been rejected more than once.
The most common reason for rejection is being self-employed or a contract worker, with one in four saying they have chosen to give up their self-employed status to secure a mortgage.
Other key reasons for being turned down for a loan include deposit size (18 per cent) and a low salary (16 per cent).
Nearly a quarter of potential FTBs say they are worried about their credit history and a third are actively looking to improve their score.
There is also a significant proportion that have larger credit issues with one in 12 having taken out a payday loan, seven per cent having an account handled by collection agencies, and four per cent having a County Court Judgement in their past.
Overall, 62 per cent say buying their first home feels unachievable at the moment.
The process of where to start applying for a mortgage is also daunting for many, with two thirds finding home buying a confusing process. These factors, alongside applying for a mortgage and waiting to see if it will be accepted, has made three in four first time buyers feel the whole process is excessively stressful.
“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. The growth of specialist lenders, who can handle more complicated applications, have allowed for credit issues to not be as much of a significant barrier to buying a home as it was before” says Jon Cooper, head of mortgage distribution at Aldermore.
“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.”