New research has shown that one in three house sales fall through due to the mortgage not being approved. It’s why experts are advising that when you’re looking to purchase a property, including new homes, double-check your finances are in order before you apply for a mortgage. This extra scrutiny of your money situation could make all the difference in whether you manage to buy the new home you have dreamed of or whether the purchase falls through.
The study by The Nottingham building society found that, in the past five years, 34% of property buyers and sellers saw sales not being completed because of issues with securing the mortgage. In fact, problems with the mortgage was the most common reason for the sale of a home not being completed. The next most common reason for a property purchase falling through was simply a buyer deciding to change their mind about buying the property (33%).
According to the study by Nottingham Building Society, it was buyers rather than sellers who were more likely to have problems with the mortgage. At the same time, it was twice as likely that home sellers would see transactions fall through more than house buyers.
Meanwhile, figures from HMRC showed that for July this year, there were 104,200 transactions of residential property completed. It represented a recovery for the property market, which saw just 73,430 deals take place in April, following the new buy-to-let-rules being introduced. In the year up to the end of the tax year on 5 April, 1.328 million house sales were completed. This compares with 1.2 million happening in the previous year.
Su Snaith who is the head of estate agency at The Nottingham said it was worrying that the success of so many property transactions relied on buyers getting the right mortgage early on. However, she added: “There is a limit to how you can stop people changing their minds but finances shouldn’t be a factor.”
How you can ensure you don’t lose a property through mortgage issues
With this new study showing one in three property purchases collapsing because of problems with the mortgage, it’s vital you have your own finances in order before you make an offer for a new home.
Keith Osborne, editor of Whathouse?, feels it’s important to speak to a mortgage broker in advance of purchasing a home, saying: “A mortgage broker will be able to give advice on what deals are available to you and how much you can borrow. A mortgage broker could also be able to get a ‘decision in principle’ for you. This is an indication that a lender is prepared to give you a loan for the amount you require, subject to you confirming the information you have given is correct.”