How To Appear More Favourable To A Lender
Buying your first home can be expensive in 2019. But by taking small steps to improve your financial situation, you’ll have access to better mortgage products.
The number of UK renters aged 16-34 has increased from 51% to 73% over the last twenty years. As house prices go up, first time buyers have found it increasingly difficult to get on the housing ladder. Londoners are expected to find a deposit of £110,656 to put towards their first home, whereas those based outside the capital need to stump up a lesser, but still significant £32,841. Yet the Halifax First-Time Buyer Review has revealed that first time owners accounted for more than 50% of properties purchased with a mortgage in 2018. If you’re a first-time buyer and in need of a mortgage, the information can be somewhat overwhelming – follow these tips to locate the perfect mortgage product for your needs.
Use A Mortgage Broker
The best mortgage products aren’t usually those advertised on the high street. Mortgage brokers such as Dan The Mortgage Man have excellent relationships with lenders and are able to access rates and products that aren’t available elsewhere. Always make sure that the professional mortgage broker you’re working with is CeMap qualified to ensure that you’re receiving the best advice – this step could save you hundreds of pounds each month depending on the size of the mortgage you’re taking out.
Maximise Your Deposit
Lenders usually have a maximum LTV percentage they’re willing to offer, but they can provide more favourable rates if you’re able to put down a larger deposit than the bare minimum. Currently, average interest rates with a LTV of 90% are around 0.7% cheaper than those with a 95% LTV. Coming up with a decent deposit is half the battle when it comes to getting on the property ladder – some may turn to family to provide a helping hand, but if this isn’t an option then you might choose to cut back your outgoings and save a little harder for a while.
Maximise Your Borrowing
If you feel that you could afford to pay more each month than the average mortgage calculators say you’re allowed to borrow, then it’s time to maximise those multiples. Start by remembering to include all your income – so if you have a part-time or freelance job bringing in regular income on top of your official permanent role, then report your total income to the lender. You can also apply for a guarantor mortgage, which looks at your parents’ income as well as your own to potentially allow you to apply for a larger mortgage. Your parents would be liable for arrears and repayments.
Tidying Up Your Credit Report
If you’ve had some problems getting credit, or even missing payments in the past, then it’s important to tidy up your credit history before applying for a mortgage. This step will help you be accepted, as well as increase your chances of getting a product with a better rate. Apply for a copy of your credit report and look for any anomalies – you can have past relationships removed from your history if they’re impacting your score for example. You can also improve your credit by getting on the electoral register.
Getting the perfect mortgage as a first-time buyer is all about making your financial situation appear more attractive to a potential lender. Once you’ve taken these small steps, you can apply for a mortgage in principle and then start viewing some dream homes!