What to do Pre-Application

For you or your loved ones getting a mortgage may seem a little bit like climbing Everest. The summit is incredibly far away and it’s going to be a long journey that requires a lot of commitment. That’s because the process of buying a home doesn’t start by selecting a property that’s within your budget – it can take months, even years of preparation to get fully mortgage-ready.

There are a number of things you can do in advance to prepare for a mortgage application that will make the whole process a lot easier and smoother for you. These include but are not limited to:

Saving for a deposit
This might sound like a simple and obvious piece of advice but it is still incredibly important. The more you’re able to save for a deposit means the less you will need to borrow from the lender, which means that you’re taking on less debt.

This means that you will have a smaller loan-to-value which will generally allow you access to lower mortgage rates so you will be paying less interest across the mortgage term. Ultimately having a larger deposit can save you money in the long run and your adviser will be able to help you secure the deal that’s right for you dependant on the size of your deposit.

Register to vote
Registering to vote, if you’re not already on the electoral register, is the easiest thing you can do to get yourself mortgage-ready. Without being registered it’s almost impossible to get a mortgage as the majority of lenders use the electoral roll data for identity checks – for this reason, it’s also important that you make sure your address history is up to date and that your forms of identification are accurate.

Build up your credit score and review your credit history
Check your borrowing history in advance. This will allow you to dispute any inaccuracies so that lenders will receive the correct information on your ability to repay your debts. Your credit score, on the other hand, will give an indication of how creditworthy lenders may find you. If your score is low, you may want to see if there are any credit habits that you need to improve on before making a mortgage application. It’s important to note, though, that scoring bands can vary among different credit reference agencies which is why seeking professional advice is important.

Clear your debt or reduce your debt-to-income ratio
Your debt-to-income ratio is the proportion of debt that you have in relation to the money you earn – the higher this number, the more debt you have. Lenders typically prefer applicants with a lower ratio as it means you’re more likely to have the funds to make your monthly mortgages repayments. If you’re in a position to be able to clear your debts completely this will make you more attractive to potential lenders.

Saving for other fees
Whilst saving for a deposit is somewhat obvious, there are also a number of other fees and costs that you realistically need to be saving for before applying for a mortgage. There are conveyancing fees, paid to your solicitor to cover all of the legal work associated with buying a home, and moving costs that, among other things, need to be considered.

While this is only an overview of just some of the things you can do to get yourself mortgage-ready your mortgage adviser will be able to give you more detail on how to fully prepare yourself.

If you want more advice on how to become mortgage-ready contact your adviser today. If you’d like to discuss the options available to you, contact your adviser today.

If you’d like to discuss the options available to you, contact your adviser today.

£2m prize offered for rent check tool

A competition to develop a tool to record rental payments on credit histories has been launched by the Government,
with a £2 million prize going to the winning technology firm.

The competition was announced in the 2017 budget, as a part of the Government’s strategy to help more people onto the housing ladder.

What is it and how will it work?
Known as the Rent Recognition Challenge, the competition is looking for budding entrepreneurs to develop an application to enable the 11 million renters in the UK to record and share their rent payment information.

The six most promising proposals will receive grant funding to turn them into workable products, before being
narrowed down again to several teams who will develop the ideas into market-ready products.

How will it help turn renters into first-time buyers?
With the number of people renting increasing, and affordability issues still hampering first-time buyers, there have
been several requests for lenders to begin taking into account rental payments when assessing an applicant’s credit
score.

Monthly rent is a tenant’s biggest outgoing payment, which makes it logical to use when assessing a mortgage
application. But lenders are currently unable to use this information and take rental data into account, just because
it is not accessible.

After vigorous campaigning and a Westminster debate on the issue, development on solving the problem is finally
underway. The Treasury’s competition will begin this year, with initial applications being accepted.

Do you know what your credit score is?

Your credit score can affect your ability to borrow money or access products such as credit cards and loans. Everyone can check their credit score for free. One of the easiest ways to check your score is through an online agency such as Experian or Equifax. If it looks like your score isn’t as good as it could be, don’t worry, there are ways you can improve it!

How can I improve my credit score?

  • Register on the electoral roll – if you are not registered to vote then you will probably find it harder to get credit. It is easy to register on the electoral roll by post or online.
  • Correct any mistakes on your file – it is important to check all your details are correct because even a small mistake could have an impact on your score. It is also important to ensure all your personal details are correct, including your name and address with your local authority and government bodies.
  • Pay your bills on time – by paying for your bills on time you are proving to lenders that you are able to manage your finances well.
  • Check if you are linked to another person – if you are linked to someone else’s credit rating through means such as a joint account, their credit rating could affect yours.
  • Check for fraudulent activity – if something appears on your credit report that doesn’t apply to your activity, it may be a sign of fraudulent activity. If this is the case you should contact the credit reference agency and any other relevant bodies such as your bank to inform them.
  • Manage your debt – if you are struggling to manage your existing debt, you should seek debt advice. This is important because you don’t want to be issued with a County Court Judgement (CCJ) as it would have a huge impact on your credit score.
  • Reduce your debt – if possible you should reduce any remaining debt before applying for more credit. This is because lenders will usually hesitate to lend you more credit if you already have high amounts of existing debt.
  • Stay in one place – lenders prefer to see that you have resided at one address for a substantial amount of time.

How long will it take to improve my credit score?

Your credit history is built up gradually over time as you increase the amount of payments you make on time. If you have a negative mark on your history, such as a CCJ or late payment, it will usually stay there for at least 6 years. However, if this is the case there are still options available that we can help you with.

If you would like to discuss your credit score and its effect on what mortgage you could obtain then speak to one of our advisers today.