It’s got even harder to get a mortgage because of changes brought it in under the Mortgage Market Review. So it’s worth making sure your mortgage credit profile is in the best possible shape. Lenders will want to take a close look at your spending and if you haven’t gone for a mortgage for a few years the added level of detail will come as a shock.
Making sure bills are paid on time and being registered to vote are two of the basics but there is a lot more you can do, including checking there are no black marks against your name with credit reference agencies:
If you have lots of credit cards but only use a couple it is worth cancelling the ones you do not use. Lenders will be worried that when you move in to your new home that you may go on a spending spree if you have lots of credit available.
But at the same time you need to have a record of handling a credit card properly so if you have no credit available you should take out a card and then make some purchases and pay them off sensibly over a few months.
But don’t make lots of applications to find out what is the best deal you can get. Once again lenders may think you want to go on a mega spend.
Prepare a budget that lists all your spending and saving. You need to show what comes into the household and what goes out. Itemised bank statements and credit card bills will help support this budget. How much do you spend on transport, food, gas and electricity,child care, going out, staying in, clothes, hairdressing or hobbies?
If you plan to cut your spending on one of the above to afford the mortgage it is best to start now to demonstrate that you can save the money.
You also need to make sure that there will be no double counting. For example, people who use credit cards to buy all their food need to be able to show the food shopping in their credit card bill, so the lender doesn’t assume all the credit card spending is on extras and luxuries – this is another good reason for preparing your own detailed budget to show the lender.
Lots of people have credit blips on their records even when they are totally responsible. These can make mortgage application difficult. Mortgage brokers can help you to make a better case and know which lenders are more likely to accept your application. The broker charges a fee that they should tell you about upfront but if it gets you out of an expensive rented property into a home you can afford it will be worth it.
Finding a mortgage broker:
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