#TuesdayTips - Get mortgage fit
Housebuilder David Wilson Homes said the EU Referendum result has created some uncertainty for potential buyers but says that nothing has changed in terms of attractive interest rates and schemes to help existing owners move to a larger home in Hampshire.
Help to Buy is a very popular scheme which has already helped tens of thousands first-time buyers in England to get onto the property ladder or move to a larger home. It works by the government lending the purchaser 20% of the value of the property which does not need to be paid back for the first five years. In addition to just needing a 5% deposit, buyers can also access the lowest mortgage rates when using the scheme.
David Wilson Homes sales director Michelle Storer says: “2016 has proven to be an incredibly busy year in the housing market and there is still demand from people looking to buy a new home. A number of our developments have proved so successful that we have waiting lists for new releases and the savvy buyers are doing all they can to put themselves in the best position possible to complete a purchase this year.”
She said buyers are being advised to ensure they are ‘mortgage fit’ by being proactive and following a series of simple, practical steps to make themselves more attractive to mortgage providers which means not only getting a mortgage but getting a cheaper rate as well.
David Wilson Homes top mortgage tips:
Check your credit score
First of all, check your score. You can do this easily online with credit reference agencies. Ensure all information is correct and if it isn’t, write to the agency and request that they change it. If you have a poor score, you will be able to start making changes to improve it.
Understand your limits
If you have existing credit such as credit cards and loans, you must ensure that you keep up with the minimum repayments. If you are really struggling to pay, speak to your lender as this may show favourably on your credit score. Similarly try not to get too close to your credit limit, if you do, lenders may view this as ‘excessive’ debt.
Missed payments, County Court Judgements (CCJs) and defaulting on credit can be why up to a third of applicants are rejected for mortgage finance. A growing percentage of applicants are also being rejected for taking payday loans and betting patterns being evident on bank statements.
Be honest about your spending
Be open and honest about what you really spend or are expecting to spend, this includes travel, pension, gym etc. On any mortgage application provide a clear picture of your finances so the most accurate picture can be presented to a lender.
The family connection
Details of your family’s credit score are not kept on your file, so long as you don’t have any joint finances. If you do, you are likely to be co-scored and this could stop you securing a mortgage. So if a family member, partner or housemate has a poor credit score, keep your finances rigidly separate. This includes joint accounts and bills under both names.
It’s all in your history
You may not realise, but as many as 1 in 10 house hunters looking to buy a home have no credit history. They are often viewed as less credible as lenders have no information to base their decision on. Although you should never get in debt to build up a credit history, by taking out a credit card and using it regularly (ensuring you pay off the bill at the end of the month with a direct debit) you will begin to build a credit history. Another good way to build your score is by taking out a mobile phone contract.
Get on the electoral roll
You should try to show lenders that you have a ‘stable’ lifestyle, for example you are in full-time employment and live at a fixed address. If you aren’t already, register for the electoral roll as you’re unlikely to get credit without it. Also if you can, provide information such as a landline number rather than a mobile number.
Be consistent and double check
It sounds simple, but one slip up on the application form could scupper your chances for securing a mortgage. This could be from a simple mistake, such as putting a salary of £3,000 instead of £30,000 but it could also be from inconsistent information (even on other mortgage application forms) as this can flag up possible cases of fraud and could slow down or stop your application altogether.
Also bear in mind that submitting numerous applications in a short space of time could have a negative effect as lenders will worry about why you have been rejected before.