First Time Buyers - Improve your chances of being accepted for a mortgage.
Mortgage demand is higher than ever thanks to the stamp duty holiday and the rise of 95% mortgages. This means it is more important than ever for home buyers to be ‘mortgage ready’. Here are some tips to put you in a better position.
If you have been following what’s going in the property world, you’ll be well aware there are currently incentives galore for anyone who wants to buy a home.
Stamp duty doesn’t apply on the first £500,000 of any property purchase until 30 June – and after that time the ‘nil rate’ still applies to the first £250,000 of the price until 30 September. After this the ‘nil rate’ reverts to just the first £125,000.
What’s more, in mid-April the government will be providing guarantees to some of the big lenders so they can offer 95% loan-to-value mortgages – in other words, anyone with a 5% deposit can, if they pass criteria, take out a mortgage again.
Some lenders have already started to offer 95% mortgages however, outside of this guarantee. Most of these offerings are available via brokers, some exclusively – so it’s definitely worth speaking to us if you want to scour the market. It also means that by mid-April there will be some great options for small deposit borrowers.
So far it’s all looking good if you are a small deposit borrower – the options and incentives are most certainly out there. But don’t get excited just yet…. there’s still the small matter of the mortgage lenders’ checks. When you apply for a mortgage, you will have your finances and income scrutinised and even if you have the required deposit, if you don’t pass affordability tests; you may still be rejected.
Fortunately, there are a number of things you can do to improve your chances of getting that all important ‘yes’ from a mortgage lender and getting yourself mortgage-ready will help. Checking your credit file is the first thing you should do as this is how the lender will initially ‘see you’ and it is important it shows you in the best possible way.
Know your credit score.
Understanding your credit score, what it is and how it could be improved is the first step to ensuring you are in the best possible position to apply for a mortgage. The higher your credit score, the better your chances of being accepted for a mortgage, at the best rates.
Check your report and ask for any errors to be corrected.
Looking at your credit report will help you to see what is impacting your credit score.
They generally cover the past six years and so the sooner you are able to take control of your finances and make sure any problems you might have faced in the past (such as paying bills on time) have been sorted, the better. If you’re applying for a mortgage, it’s a good idea to check your credit report as early as possible. Ideally, at least two months before you apply.
If you find any errors, ask for them to be corrected.
Try to avoid new debt in the run up to applying for a mortgage.
Try not to max out your credit card or use your entire overdraft, as lenders may think you’re in financial difficulty.
Equally, applying for credit too often can lower your score, as each application is marked even if you’re not approved. This is called a ‘hard search’ and lenders can see your application, so try to only apply for credit you’re eligible for.
The firm usually charges a fee for mortgage advice. The amount of the fee will depend upon your needs and circumstances. This will be discussed and agreed with you at the earliest opportunity. Our typical fee is £395.
Mortgage Smart Ltd is an Appointed Representative of PRIMIS Mortgage Network which is a trading name of Personal Touch Financial Services Limited. Personal Touch Financial Services Limited is authorised and regulated by the Financial Conduct Authority.
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Your home may be repossessed if you do not keep up repayments on your mortgage.