Summer is all about getting fit and while some may think this is all about your body we take a look at getting your finances in order and ensuring you are mortgage fit.
Despite suggestions of a modest rate rise mortgage rates are still extremely low and this coupled with schemes such as Help to Buy and no stamp duty for first time buyers means 2018 will continue to be a good year for those looking to move home.
While the prospect of Brexit has led to some uncertainty five star housebuilder Barratt Homes says nothing has changed in terms of attractive interest rates and the many schemes that can help first time buyers get onto the housing ladder, or existing owners move to a larger home.
Help to Buy is a very popular scheme, which has already helped tens of thousands of first time buyers in England to buy their first home. It sees the government lending a purchaser 20 per cent of the value of the property, which doesn’t need to be paid back for the first five years. In addition to needing just a five per cent deposit, buyers can also access the lowest mortgage rates when using the scheme.
And the stamp duty changes are proving a real bonus for first time buyers. Barratt Homes sales director Andrea Pilgrim comments: “This break from stamp duty will be music to the ears of many first time buyers who may be struggling to deal with some of the upfront costs of homeownership. By removing the stamp duty tax, aspirational homebuyers will now be able to put more savings into the actual cost of buying a home and allow them to make a move sooner rather than later.”
Andrea adds: “The stamp duty break combined with continued availability of the Help to Buy equity loan scheme means that there has never been a better time to buy a brand new home.”
Andrea advises buyers to ensure they are ‘mortgage fit’ for 2018 by being proactive and following a series of simple, practical steps to make themselves more attractive to mortgage providers, which could mean not only getting a mortgage but getting a cheaper rate as well.
7 top tips for getting mortgage fit:
- Check your credit score – First of all, check your score. You can do this easily online with the two main credit reference agencies; Experian and Equifax. 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.
- Think about family credit connections – 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.
- Have a history – You may not realise it, 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 everything – 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.