The Broker: Mortgage advice from the experts mouth - How to make sure that your finances are mortgage-ready
Written on 10 November 2016 by
SO YOU'RE thinking of buying your first property? Well, as daunting as it may seem, there are some things that you can do to make the process a little bit simpler.
Firstly, check your credit file score. It's impossible to miss the various ads on the TV from credit reference companies extolling the virtues of this to help you get a better rate for a mortgage, personal loan or credit card.
Check your financial accounts are linked to your current address and that you are on the electoral roll. If there's anything erroneous, contact the credit provider straight away to get it resolved. It's important your credit score is a good as it can be, especially if you're buying at 90 or 95 per cent, as it's tough to pass lenders' credit scores at these levels. Defaults, county court judgements and missed payments are all red flags. So, unless they've been entered in error, then getting them settled asap is your first priority.
A low score low could be due to you having a lack of previous credit, so applying for a credit card, using it sparingly each month and paying the balance in full should help to improve your score, showing lenders that you are experienced and responsible when using credit. Do not take out a Pay Day loan, as this tends to have the opposite effect.
Organise your current accounts. If you are renting, then one suggestion is to have a bills account, with rent, utilities and council tax coming out of that, and a separate account for personal spending. Also, try to stay out of your overdraft as much as possible, and never go over your overdraft limit, because as with Pay Day loans, this causes lenders to worry that you are living beyond your means.
Now the hard part - time to get tough on your discretionary spending. No one is suggesting living on bread and water, but a thorough review of what you actually spend your money on is very good idea. You may be surprised where you could make some savings to boost your deposit - and again this helps to present you as a responsible borrower to lenders.
Lastly, speak to a broker to get an idea of the minimum, ideal and maximum levels you may be able to borrow, before you start viewing. Once you enter the great game, you will invariably be drawn to ever more pricey properties, so it's a good idea to see what you can and can't do up front, before getting your heart broken chasing an unattainable dream.
Interested in becoming a buy to let investor but not sure where to start? Call our experts now on: 0344 346 3672
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.