The importance of good credit in the house buying process can't be understated. It is possible to get a mortgage with adverse credit as long as this is not current adverse credit. So, if you had some problems a couple of years ago then there will be options for you. However, if you have just missed the last mortgage payment or haven’t paid your credit card for the last few months then a lender will view you as a distressed purchaser and will probably decline an application. Good credit and conduct underpin the entire process as it will dictate the sort of mortgage deal that you are likely to acquire.
To obtain a good credit score you will need to be registered on the electoral roll. Run your credit accounts correctly and keep your spending and credit commitments under control.
With credit agency sites such as Experian, Equifax, Credit Karma, Clear Score and Check my file it is extremely easy to keep on top of your credit score and credit commitments. You need to take care to monitor your report and spending and this should become an almost daily habit to monitor when saving for a house.
Plan for your deposit
Where is your deposit coming from? Will this be from savings, gift from a family member, equity or inheritance.
Saving for a deposit can be hard as a first-time buyer especially if you are also paying rent. A deposit of 5% is the minimum needed, although in Covid 19 times this is becoming a rare thing as lenders are asking for bigger deposits generally a minimum of 10%. Plan to save, have a goal and stick to it. The more you save and get use to saving the better your credit history is likely to be as you will be cautious on your spending.
The Importance of knowing how much you can borrow?
I cannot stress the importance of speaking with a good mortgage broker you can trust and want to work with. At Prosper we have the latest software which checks all the latest affordability calculations taking into account your type of income, credit commitments and mortgage term. The difference in lending and affordability between lenders can range massively and we have seen where clients have been to their own bank and not been offered the amount, they require due to their own banks affordability calculation. At Prosper we can find the lender that will lend the most money at the best rate. This saves you the client time and stress in trying to find the right deal and lender.
Do your research and find the right mortgage advisor
Do not be afraid to ask for help! This is one of the biggest financial decisions you will ever make. You are not a professional mortgage broker and although you may know someone down the pub who has had a mortgage in the past or you have parents that are well meaning and have your best interests at heart, they are not a professional mortgage broker that has the latest software and experience on what lenders are doing at the current time.
If you where choosing a holiday or a restaurant to eat in, you would spend time on researching. This should be the same with finding the right mortgage and mortgage advisor. Google mortgage broker or advisor in the area you live in and read the reviews that have been left by clients. If there are no reviews or only a few then you have to question the legitimacy of the reviews that have been left.
At Prosper because we do arrange over 1500 mortgages per year and arrange over £300Million in mortgage lending we know lenders criteria and more importantly mortgage lenders appetite to lend. This is what we do and this is why it is important to use a competent and professional mortgage broker.
Whilst paying for advice might feel unnecessary and possibly trivial at the time, in the long run it can be hugely beneficial.
The process of buying your first or new home can be stressful but at Prosper Home Loans our job is to take the stress away and do the work for you. The ultimate goal to get you the home you deserve and this is truly a rewarding experience for you and our dedicated advisors at Prosper.