If you’re a first time buyer looking to get onto the property ladder your main focus is probably raising a deposit. And rightly so. The bigger the deposit you can put down the cheaper your mortgage will be. If you have a large deposit you’re deemed less risky and therefore lenders will look upon you more favourably. However, there are other steps you can take to improve your chances of getting a mortgage too.
Boost your credit score
Your credit score is important. Lenders will use it to determine how you manage your finances and how you’re likely to cope with a mortgage. Yet, despite how vital it is when it comes to seeking a mortgage or a loan, most people have no idea what their credit score is or if it’s causing them problems. Start by checking your score using a credit reference agency. Most lenders use Experian or Equifax so these are good options. If your score is not looking great take steps to improve it. Cancelling any credit cards you don’t use and making sure you’re on the electoral register are good starting points.
Reduce your debts
A mortgage is a big commitment and your lender will want to know that you can manage your finances well enough to repay it. If you’ve got lots of debts your lender may think you’re unable to manage. Furthermore, having lots of outgoings will seriously affect your affordability. Where possible, pay down any debts you have before applying for a mortgage.
Prove your income
If a lender is giving you a huge sum of money it wants to know you have the means to repay it and that means having proof that you have a regular income. Your lender will probably want to see six months of banks statements clearly showing your wages being paid in to your account. If you’re self employed you’ll need at least two year’s of accounts. It’s helpful to use a qualified accountant to ensure your documents are all in order.
Get expert advice
Taking out a mortgage is probably the biggest financial commitment you’re ever likely to make so it’s important to get it right. Enlisting the help of a qualified and experienced mortgage broker, like the team at We Know Mortgages, will help to ensure you get the most appropriate deal for your circumstances. If you’re looking to take that all important first step on the ladder call in to our Piccadilly offices and see what we can do for you.
As a society, we’re changing. We’re living longer. We’re more active in later life. And, though not always through choice, we’re waiting longer to buy properties. And the mortgage market is finally starting to reflect that.
For many years mortgage lenders required borrowers to have paid off their mortgages by the age of 75 at the latest. This meant that borrowers in their 50s seeking a mortgage with a term of 25 years could struggle.
However, in recent years mortgage lenders have started to move with the times, recognising the changing face of our society and adjusting their criteria accordingly.
While some of the bigger lenders and high street banks have yet to address the issue, a number of smaller lenders have changed their age limits in recent months with building societies leading the way. It’s now possible to take out a mortgage with a maximum age limit of 85 years subject to affordabilty.
This is a welcome move. Affordability is obviously key when it comes to borrowing. Nobody wants to see a return to the days of reckless lending that we saw in the run up to the market crash. However, affordability is not defined by age anymore. An income from employment is just one form of income. By assessing a client’s circumstances and making a decision based on their affordability rather than using a blanket age limit lenders can ensure those borrowers who are able to repay a mortgage are not unfairly refused one.
If you’re concerned about borrowing into retirement and would like to know what options are available to you call in and see us at We Know Mortgages for a chat.
You may have heard a lot in the press about 100% mortgages with some articles criticising such products and others applauding their return. But what exactly is a 100% mortgage and why are they causing so much fuss?
100% mortgages are simply mortgages which cover the whole of the purchase price of a property. Normally when buying a house a buyer will pay a portion of the property price direct to the owner as a deposit and get the remainder through a mortgage from a lender. The amount of deposit you put down determines the ‘loan to value’ ratio or LTV of the mortgage. So, for example, if you are buying a property for £100,000 and you pay £10,000 as a deposit (which is 10% of the price) you will need to borrow the other 90% from a mortgage lender. Your mortgage will therefore be 90% LTV.
With 100% LTV mortgages the borrower does not pay any deposit. Instead, in the scenario above, he would borrow the full £100,000 from a lender.
So what’s the problem? Well, such mortgages are considered risky because (with interest considered) as soon as you take the mortgage out you’ll find yourself in negative equity. In other words, you’ll owe your mortgage lender more than your property is worth.
Such mortgages all but disappeared following the credit crunch but over the last couple of years they’ve started to re-emerge. There are now a handful of lenders in the market offering 100% deals.
The difference with the 100% mortgages of the post credit crunch world however is that they often require a guarantor – normally a parent – to essentially promise to be responsible for your debt if you fall into difficulty.
If you’d like to know more about high LTV mortgages or alternative options for buyers with small deposits come visit us at We Know Mortgages Ltd. We’ll be happy to help.