A credit score is a tool that lenders use to measure whether or not an applicant can afford a mortgage or not. The higher your credit score, the more likely it is that you’ll get accepted for a mortgage. Which means that if you have a low credit score, your chances of getting a mortgage are lowered.
Having a high credit score may sound great, however, it doesn’t guarantee you a mortgage in any way. Each lender has their own unique lending criteria and it’s more than likely that you won’t meet all of them. Sometimes it’s down to your circumstances and not just your score.
It is more than likely that each lender will have completely different lending criteria. Lenders have almost carved out their own niche market. You could end up matching with lots of lenders or it may only be a couple, but all that matters is that you match with one and get an amazing mortgage deal from it!
Whether you receive help from a Mortgage Broker in Harrogate or go solo and use your bank, it’s their job to help you compare deals and match you with a lender. As a Mortgage Broker in Harrogate, we would always recommend taking up our free mortgage consultation offer. This way, we can evaluate your situation and compare deals for you straight away. If you go to a bank, you could just be added to a waiting list.
If you are struggling to match a lender’s criteria, it could be down to multiple things or maybe just one. The most common reason why people don’t match their lender’s criteria is that they have a low credit score. If this is your situation, then you need to find some ways to improve your credit score.
Having unnecessary credit searches on your file could negatively impact your credit score. Lenders don’t particularly like seeing repeated credit checks; they may think that there is a reason behind it and they may even start asking you questions about it. Even using price comparison websites could damage your score.
On another note, if you are applying for a mortgage, it is unwise to apply for any form of extra credit in the meantime of your application. If you manage to pay back owed money before your application, it will look good on your file, however, if you are borrowing/paying back money during your application, it will have a reverse effect. If you borrow credit, some lenders’ could think that you cannot afford the deposit and are relying on the credit to help you.
A great way to improve your credit score is to register onto the Voter’s Roll. Lenders love seeing applicants that are registered on it as it indicates stability. It’s really easy to get yourself registered and the fact that it can boost your credit score surely means that you have to sign up if you haven’t before!
Even if you are already registered, it’s always a good idea to double-check that you have entered all of your information correctly. If you have an old address on their system, lenders will easily spot this mistake and it could go against your score.
Maxing out your card each month will have a detrimental effect on your credit score. If you are using a credit card, a lender would much rather that you pay off the full balance each month rather than cutting it short. Showing you can meet set payments each month shows reliability and can help your chances of being accepted for a mortgage.
On the other hand, if you are doing the opposite and exceeding your credit limits or overdrafts, your lender will think that you don’t take your finances seriously. This could massively impact your credit score, especially if you get declined by a lender due to this reason.
Your address should always be up-to-date. People usually get caught out when they move out from their parent’s house and forget to update all of their address’. If you forget to change your address on things such as credit accounts, it will appear that you are living in two separate places. This can hurt your credit score once lenders see this so make sure that you are keeping on top of what address’ are linked with each of your accounts.
If you have any store/credit cards that are no longer in use, you should contact the provider and get them to fully close down your old account(s). These types of accounts are probably doing more damage than you think.
However, if you manage to close your account(s) it could still have a negative effect on your credit score as the credit reference can’t really tell if it’s you closing the account or the provider. Don’t worry about this, if they ask, you will have to explain and it could work in your favour as you are proving that you want to improve your chances of being accepted. Remember that it’s always good to check up on these types of things just in case. For example, you could’ve lost a card and you didn’t realise, then you fall victim for fraud. This could end up having a worse effect on your score.
People often don’t know that they are still financially tied to a family member or ex-partner. If this is the case, it can have a negative effect on your credit score without you even realising.
If the account that you are still tied to is still active, you must know that you will not be able to remove your link just yet. If you want to remove any of these links, then you should get in touch with the credit reference agencies and make a request.
As a Mortgage Broker in Harrogate, we know that some applicants see credit scoring as an unfair way of determining whether or not you’ll get accepted for a mortgage. For example, you may have a low credit score due to personal circumstances that couldn’t be prevented. As a Mortgage Broker in Harrogate, we mostly see that it’s people that are Moving Home or Self Employed struggle with their credit score. However, if this isn’t your mortgage situation and you still need help with improving your credit score, you know to get in touch with.
Sending an up-to-date credit report to your expert Mortgage Broker in Harrogate could prove extremely beneficial to your mortgage journey. A great tool that we always recommend to our customers is checkymyfile.com.
The more your advisor knows about your finances the better. There are still some lenders out there that prefer to do things the old-fashioned way and will manually assess your application. They will still have rules that they stick by about the number of defaults and CCJ’s that they will allow.
A Mortgage Broker in Harrogate, like us, likes to do things the new way and will always aim to deliver you the same fast and friendly mortgage advice service that you are all used to. We hope to hear from you soon.
The purpose of an Agreement in Principle (AIP) is to determine whether or not you pass a Lender credit score to qualify for a potential mortgage. Sometimes this is also referred to as a Decision in Principle.
By obtaining yourself an Agreement in Principle, you are ready to support any potential offers you make as a First-Time Buyer in Harrogate. Having one of these may also put you in a place to negotiate a lower price as it shows the seller you are serious and have the means to proceed with the purchase.
Common practice these days seems to lean more towards soft searches, though even these could still affect your credit score. Usually this would be more likely with a hard search, with soft searches generally leaving your credit score unaffected.
The difference between the two, is that a soft search won’t dig as deeply as a hard search. You can always rest assured though that the lender has chosen either with the best of intentions.
Now and again a hard search or two should be fine. It becomes slightly more problematic if you start having multiple hard searches over a short amount of time. Soft searches won’t show up on your credit report, but a hard search will. This looks bad, especially if you don’t pass the different criteria.
Don’t let this put you off however, as if you know you know you have a good credit score and taking a hard search with that lender is the best deal, you’ll most likely be fine.
We really wish it were the case, but sadly no, there are no guarantees that having an Agreement in Principle will get you a mortgage. You still need to present the lender with your documents and it’s only then, that the underwriter will make the final decision on your case.
A regular occurrence here at Harrogatemoneyman, is customers getting in touch after being declined at application stage. This is often down to missing some of the small print mentioned in their Agreement in Principle. You will need to provide identification for proof of who you are, payslips for proof of income, and bank statements for proof of handle your finances the right way. Without these, your case won’t go to offer.
If we were to get technical, the answer is yes you can. However, it is highly unrecommended and any credible estate agent will not proceed without proof that you can proceed.
Within 24 hours of speaking with a mortgage advisor in Harrogate it is possible to obtain an Agreement in Principle.
Generally speaking, an Agreement in Principle will expire around the 30-90 days mark. The good thing is though, that this doesn’t mean you should just apply for the first house you find. If your Agreement in Principle expires, it is relatively straightforward to have it refreshed when you are ready to make an offer on a property.
Finding a mortgage only to be declined a mortgage can be a major disappointment, we get that. We recommend getting an Agreement in Principle as early as you can to avoid that disappointment.
When you start out looking for a mortgage/remortgage in Harrogate, you will soon realise that there are lots of different options available and each has advantages and disadvantages depending on your individual situation.
A fixed-rate mortgage means that your mortgage payments are going to stay the same for a set period of time. You can set the length of which you want to fix your payments for, typically this being 2, 3 or 5 years or longer. And no matter what happens to inflation, interest rates or the economy you know that your mortgage payment, usually your biggest outgoing, will not change.
A tracker mortgage means that your interest rate will track the Bank of England’s base rate. So in other words, the lender that you are with does not actually set the rate themselves, you will be paying a percentage above the Bank of England base rate. In an example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.
Back in the mid-2000s, these deals were very popular, as the rate you where tracking was a fraction above that of the base rate. These deals aren’t as attractive anymore, however always remember that it is a variable rate so if the Bank of England base rate goes up, your mortgage payments will also increase.
When you take out a repayment mortgage this means that each month you are paying capital and interest combined. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end and the property becomes yours. This is the most risk-free way to pay your capital back to the lender, in the early years it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term. This situation switches in the last ten years or so of your mortgage where your payments are paying off more capital than interest and the balance will come down much faster.
Whilst many Buy to Let mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on an interest-only basis. Back in the ’80s and 90’s how a mortgage would work is that you would take out an interest-only mortgage, a mortgage were you just pay the interest. And the idea was that you would take out a separate investment vehicle, such as an endowment policy or pension to pay the balance back at the end of the mortgage term.
Whether there is going to be enough money to pay the capital balance will depend on the performance of your investment vehicle. During the 2000s some of these investments didn’t perform as well as expected and some borrowers were left with a shortfall. It is much less likely for lenders to offer an interest only product now, however, there are certain circumstances where this can be an option if you are going to downsize when you are older or have other investments what you will use to pay the capital back. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than back in the day.
With an offset mortgage, the lender will set you up a savings account to go alongside your mortgage account. How this works is that let’s say you have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you only pay interest on the difference, so in this case £80,000. This can be a very efficient way of managing your money, especially if you are a higher rate taxpayer. This also is a way of reducing the mortgage term because as that money is sitting in that savings account your mortgage term shrinks.
This mortgage option was popular in the late ’90s and early 2000s, it originated in Australia and became popular in the UK when introduced by lenders such as The Yorkshire Bank. Currently, this is not a very popular mortgage option, The reason for this is that people don’t save as much as they used to anymore, however in the right circumstances an offset can be the perfect solution.