MANY FIRST-TIME buyers hope to make this year the year they get on the property ladder, thanks to the increasing availability of 95% mortgages
But while there are higher numbers of suitable first time buyer mortgages available, there’s no guarantee you’ll be approved.
To improve your chances, here are five of our top tips.
REGISTER TO VOTE
Though the main purpose of this register is to prevent fraudulent voting, it’s also used in credit applications and is one of the first things a mortgage provider will check. The process of registering is easy (as long as you’re a British citizen, an Irish citizen, or a Commonwealth or EU citizen who is living in the UK) and it can be completed online at www.gov.uk/electoral-register
CHECK YOUR CREDIT REPORT
Your credit report includes any financial issues on your record in the last six years.
If you’ve received a county court judgement (CCJ) or filed for bankruptcy in that time, more than likely you’re aware of the issue and how it could affect your mortgage application. But even smaller incidents, such as late bill payments, can impact your score, and occasionally you’ll see something on the report you weren’t aware of.
ORGANISE YOUR FINANCES
Lenders want to see that your financial affairs are in order, so it is a good idea to have a spring clean and get everything neat and tidy.
If you have bank accounts that you no longer use, close them. If you have small amounts of money in different accounts, consider pooling them together into one to give a clearer picture of your financial position. If you have a Lifetime Individual Savings Account (LISA), top it up to the maximum £4,000 annual allowance, so that the £1,000 government bonus will be added to boost your savings.
This will be particularly important for your current account as most lenders will want to see your bank statements. They are not just looking at your balance but how you use the account and what you spend your money on each month.
PAY OFF OUTSTANDING DEBTS
Mortgage providers will check to see how many credit arrangements you already have before they approve your mortgage, and they want to see that number as low as possible. They will be checking whether you can afford the new mortgage as well as the other debts and credit.
So, if you have small outstanding debts that you can clear without subtracting from the money you have saved as a deposit, it ‘s probably a good idea to clear them.
DELAY NEW CREDIT APPLICATIONS
If you know that you will be soon applying for a mortgage then you should avoid signing up for any new credit agreements such as loans, car finance or credit cards.
Usually, when you make a new credit application, the lender will perform a hard enquiry on your credit file, this will leave an entry for other lenders to see. If several hard enquiries are made during a short period, that can temporarily affect your credit score.
So, until your mortgage application is approved and you have moved in, it’s best to delay new credit applications.
It is quite common for lenders to re-check your credit file just before they release funds to your solicitor. This picks up any loan or credit applications that you have made after applying for the mortgage.