The housing market is looking strong for 2016, with more and more renters hoping to take those exciting first steps towards home ownership. In fact, Rightmove.com has reported record web traffic over the Christmas and New Year period for both sales and lettings!
For many, purchasing their first home is on the top of their New Year’s resolutions list and, with the aid of Help-to-Buy, new build homes have become a very affordable option. However, the government-backed scheme is only one element to consider when purchasing a first home. Why? Because lenders have their own criteria to adhere to when it comes to mortgage applications.
Whilst Help-to-Buy will help to reduce the loan amount required, certain steps will need to be taken by buyers to ensure that their application for a mortgage is approved. To help, we’ve pulled together some top tips for first time buyers…
- Check your credit score
Lenders will check your credit score to ensure that you are financially disciplined enough to pay back your mortgage. This will also inform them of any current debt and missed payments. Sign up for a free trail of Experian to check your credit profile and, if relevant, identify any areas of improvement – it’s better to do this before the lender does!
- Register to vote
Lenders will use electoral roll data for identity checks to ensure that you are who you say you are. Even if you have a perfect credit rating, not being registered to vote in your local area could be a deal breaker.
- Pay your bills on time
Missed payments can count against you. Ensure that you have no missed or late payments during the three months (minimum) leading up to your mortgage application. Setting up direct debits for your monthly payments will help to ensure that all your bills are paid on time – particularly mobile phone bills.
- Don’t apply for credit
Avoid applying for any loans, overdrafts or credit cards shortly before applying for a mortgage. Lenders will look at your recent activity and credit applications will reflect negatively, which could result in your mortgage application being rejected.
- Cut back on spending
Lenders will want to see recent bank statements so they can check your outgoings. It’s worth cutting back on your general spending to prove to lenders that you can afford your mortgage, even when the rates go up. Plus, the more you save the more money you have towards your new home!
- Stay out of your overdraft
Being in your overdraft will reflect negatively on your application, so ensure that you do not go into your overdraft for at least three months ahead of your mortgage application.
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