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Friday, March 20, 2015

How to make yourself more attractive to mortgage lenders


Mortgage loan tips
A high credit rating helps lower home loan costs
For first time buyers, getting a mortgage can seem quite the task and can often seem like nigh impossible. However, there are a number of ways to improve your odds to make yourself a very attractive candidate to lenders. So here are some great tips on how to do just that.

Lenders


Different lenders want different things and you need to know what each one values before you decide to go forward and apply for a mortgage. In a lot of ways it’s down to you to suit the lender, rather than the other way around and you need to fit their criteria to get accepted. If you fit what they want you’ll be accepted and if not then you won’t. However, there are some common things lenders look for and these include:
  • Size of loan
  • Employment
  • The deposit you have
  • Credit rating
  • Expenditure
  • Debt level
The better the shape these are in the more generally attractive you will be to lenders.

Credit score


Your credit score matters a lot and if you have the financial discipline to have a good score, lenders will be more inclined to believe you will have no mortgage repayment issues. Looking at your previous history and how seriously you take your financial commitments is a good signifier to lenders in how you will act when you get a loan. This credit score will be based on a variety of factors and can be checked by pulling a report from one of the credit companies. If looking for a mortgage it can be worthwhile paying the small fee for this service so you can see your score. 

Alternatively, many of the companies also offer free monthly trials, which can be a good way to get an idea of how your score looks before you apply for a mortgage. 

Compare


To get a good idea of all the lenders out there it’s a good idea to do some initial research. Use a specialist that allows you to compare mortgages online – this will give you a good overview of the process. 

Errors


Sometimes credit scores have errors or may have mistaken. It’s a good idea to look through the score to see what potentially is right and wrong. If there are issues then you should contact the agency in question and ask them to remove it from their credit histories as otherwise it can cause you issues getting credit

Vote


Well, maybe not vote, but you do need to be on the electoral register as it will improve your chances of getting a mortgage. Contact your local council to register – it usually takes just a short period of time to do so and can have a notable impact on your score.

History


Check the people that you are associated with financially by looking through your credit score. If you have an ex who you are still linked to via an account, then remove them, as their bad credit may impact on your efforts to make yours good. 

Credit balances


It’s a good idea to keep your credit balances as low as you can. While it’s a good idea to have some well managed debt, too much is a sign that you’re in trouble. Ideally, you should use only a third of your potential credit. So, if you have a credit card with a £10,000, you can use around £3,000 or so before lenders get a little uncomfortable. If you have a higher level and can pay it off, then it’s best to do so. 

Inactive accounts


If you have any inactive accounts that you don’t use any more than it’s worth closing them. Keeping them open will only mean they are more likely to be defrauded or will cause problems.

Follow these tips and you can be sure you will increase your mortgage chances by improving your credit score. 

Image: Nikcname; CC BY 2.0