Thinking of buying for the first time but do not know where to start? These tips from LEBC Group’s independent mortgage service might help.
Making that first step on the property ladder can prove a real challenge for many people and with the stricter lending rules introduced last year, taking out a mortgage has become harder.
As banks are tightening affordability criteria and borrowers are struggling to save up for a deposit, LEBC Group is sharing its top five tips for first-time buyers. These can make the mortgage interview process easier.
- Establish a good credit rating at least six months prior to applying for the first mortgage. This means being on the electoral register, ensuring that you have no late payments or arrears on existing credit cards or loans and making a special effort to live within your means and not going overdrawn accidentally.
- If you have not had any previous loans and do not have a credit card, this will ironically count against you, so getting a credit card and ensuring that you pay off the balance each month will give you a better credit score than not having one at all.
- You also need to show that you can budget and have a good handle on your outgoings and any future planned expenditure. Lenders will want to see that you are capable of paying the mortgage off on top of your other bills.
- Check your pay slips to ensure that your tax code is correct; HMRC admits that over 25% of tax codes will be incorrect at any one time. If you are not paying enough tax you could have a sudden liability that will throw your finances out. If you are paying too much tax, then claiming a refund and getting the right code, will help to improve your net income.
- Have answers ready to questions regarding future plans, eg to start a family and the cost of childcare.
Kay Ingram, director of LEBC Group, comments:
“Buying a house can be very stressful, especially when it is the first time you have experienced it. Changes made to mortgage lending criteria, following the Mortgage Market Review, puts more onus on lenders and advisers to ensure that a mortgage is affordable not just now but in the future too. This has meant that many lenders have both tightened their lending criteria and lengthened the mortgage application process. It is not unusual for a mortgage interview with a lender to take up to two hours. Using a mortgage broker who can access the whole mortgage market will help your application.”
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