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.
From the set up of Help to Buy being put into action, many major Builders started selling houses by leasehold, when houses were traditionally freehold. This had built up to be a controversial issue overtime from which the Government felt the need to intervene.
Some of the major housebuilders within the country have been accused of prioritising profit over social conscience. They’re doing so by trying to balance the fact homes are needed for families and that shareholders are also tended to; this leads to the media regularly accusing them of ‘Land-Banking’, which is when they own land for a certain period of time and not build on it due to market conditions not being favourable.
Consolidation within the industry would often mean land gets inherited by Builders and their organisations which come as a leasehold basis. However, to appease buyers, they will state that both leasehold and freehold properties are available to appear that they have access to an informed choice.
The market appeared to be swaying too much towards leasehold for the publics liking, especially when observations of how much profit the Builders had been making off the back of the leases. Things became apparent when the Chief Executive of one of the UK’s largest Builders received a bonus of over £100m. At that particular moment in time, it was one of the largest bonus paid in corporate history.
Some Leasehold Homeowners became shocked when quotes for home alterations were surfacing as thousands of pounds in fees, after seeking permission from Leasehold Management Companies.
Some of the annual ground rents were to double every 10 years and owners could see that selling their home in the future once these increases have kicked in would become a lot more difficult. After the topic was subject to a debate in parliament after MP’s were notified, the government agreed that if you were buying a house then it is only reasonable that you should in fact own the freehold.
If you come to realise that you are in ownership of a house and didn’t realise that it was leasehold then you should have been made aware at the start. If you feel that the acting Solicitor did not inform you of the full facts about the lease you signed, then you should re-contact them immediately to investigate why. Although it is not advised, you do have the option to contact the freeholder at any time, if you are interested in buying the freehold from them.
Looking past the leaseholds, there is also the issue of service charges. When permission is granted by Councils for Housebuilders to build on land, they don’t always agree to adopt the common areas and roads. That would mean that the upkeep of these areas would need to be outsourced, most usually to a private company. The owners residing in the area make a financial contribution to this maintenance work on top of their council tax. By the way, this can happen on both leasehold and freehold.
The costs of the service charges can rapidly increase which infuriates homeowners who are affected. Sometimes the residents in the area group together to form an association which might allow them to choose a different service provider.
If you’re thinking of buying a leasehold property, make sure to take advice from your Solicitor in regards to the lease and be informed as to what this entails. It’s so easy to get carried away with the excitement of buying a home but you need to also take into account that it’s a major investment decision that you need to think about thoroughly with care.
Whilst it is widely accepted that there is a national housing shortage, the Government has launched several schemes over the years under the “Help to Buy” banner designed to get people onto the property ladder should they wish to do so.
Unfortunately calling all the schemes Help to Buy has caused confusion amongst consumers, so here’s an overview on what’s out there right now.
This is the most popular scheme and is available on new build properties only. The Government will lend you up to 20% of the purchase price. Usually, my customers put down a 5% deposit and take out a 75% mortgage for the rest. Remember, it’s a loan not a gift and the government have a stake in your new home until you pay them back.
If you’re in the armed forces, you can borrow up to 50% of your salary, up to a maximum of £25,000 interest-free towards a new home.
There are lots of options available to you. It’s a good idea to get hold of your Accountant and also to speak to a Mortgage Broker in Harrogate for advice.
Yes and no, the Help to Buy Equity Loan is for new build properties only. The Forces Help to Buy can be on new or old.
There may be options available to you even if you have a poor credit score. Mortgage lenders are becoming increasingly competitive on criteria and many challenger banks are entering the market.
A minimum of 5% as a rule.
Yes, family members and sometimes friends can gift (not loan). This is a popular way of First Time Buyers to get on the property ladder. In a recent Government Survey, 27% of such buyers relied on family and friends to help with a deposit.
Yes, with the Help to Buy Equity Scheme the Government loan is interest-free for 5 years, after this, you’ll pay fees. Hopefully, the property will have increased in value and you can potentially remortgage the property at any time to raise funds to increase your share. Remember, the Government will also receive their share of any profit made.
The Help to Buy Equity Loan and the Forces Help to Buy Scheme are for First Time Buyers in Harrogate.
The first stage would be to have a free mortgage consultation to work out your maximum borrowing and also to get a Mortgage Agreement in Principle Certificate so you are in a strong position to make an offer. Once you have this in place you’ll be a “Qualified Buyer”, the next step is to go and view houses!
For more information and further terms and conditions about any of the above schemes please refer to the helptobuy.gov.uk website.