While both the UK Border Agency and any number of European embassies "advise you not to make payments" before a visa is granted, the reality is that they are simply covering their own tracks (and being nice). I've had friends refused visas for incomplete documentation because they think they can wing it with less documentation.
Rest assured that in most cases, as long as you have all the documents (paid hotel booking, flights, et al) then the chances of you being refused a visa for short-term tourist or business purposes is low. Having 'firm' bookings makes your case stronger. Having said that, here are a couple of ways you can minimise the risk:
- Instead of booking your flights online, get in touch with a 'proper' brick-and-mortar travel agent. What they can do is file a booking with a airline for a 'held' itinerary. Essentially, they file passenger names, specific flight times, and a price at the time of making the held itinerary. This is NOT a confirmed booking, but you could use this as proof when applying for most visas (unless it specifically asks for a paid booking). Note that while you wait for your visa to be processed, flight prices will most surely go up so the price you pay will be higher than the initial quote.
- Hotel bookings made through major travel sites are almost always refundable. Check their terms for deductibles and cancellation deadlines. Most of them will give refunds in form of credit on their site rather than a refund to your card though. Shop around on sites to see which one has the most relaxed policy for refunds.
More stringent scrutiny is reserved for longer term visas. As long as you can reassure border control and embassy officials that you do not intend on overstaying, you're fine. For instance, I'd say I've English proficiency equivalent to a native speaker and I hardly ever get questioned at UK Border Control; it helps to be genuinely friendly and cheerful too towards them. On the flip side, I've Indian and Chinese friends (to name a few ethnicities) who aren't perhaps as 'easy' for a native speaker to understand because of their accent or speech mannerisms and they often get questioned longer during visa applications or at border control. The crucial thing is that if you give satisfactory answers and don't contradict yourself - for instance, if a visa officer asks something as simple as your date of birth do NOT mess it up because doing something like that is a red-flag for them - they cannot stop you from being given a visa or entering the country.