Credit ratings and how lenders look at them
Before applying for a mortgage, try to ensure your credit report is as positive as possible by reducing any debt.
OBTAINING a mortgage can seem like a very daunting task, but it doesn’t need to be, as there are a number of small things you can do that could greatly increase your chances of getting your dream home.
The main point to remember is that every lender has a different view of its ‘perfect candidate’ to lend to. Just because you don’t fit one lender’s criteria doesn’t mean you won’t fit another’s. There are many factors that go into a lender deciding whether it can lend to you or not.These may range from the size of the loan you want to take out and your outgoing costs, to your credit rating and employment status. Your credit score enables lenders to see that you have the financial means and discipline that will be required to pay back your mortgage.
Key areas lenders will check include your history of repayments, so if you have any ‘black marks’ where you have missed payments on credit cards, catalogues or any other existing debts within the last three months, this may hinder your chances. Unfortunately, relationships break up, so if you have financial links to someone else, such as a joint bank account from a previous relationship, you should sever that tie. If your ex-partner, or whoever the account is linked to, makes a late payment or any other credit mishap, it will reflect on your own report. It sounds obvious, but managing your credit availability is imperative when you are looking to secure the deal that you want. Your ‘credit’ isn’t just your credit card limit. It’s also your debit balances on your bank accounts and overdraft limits. When applying for a mortgage, your last three months’ account statements will come under scrutiny. Because of this, it’s a good idea to avoid applying for credit at this time as it could lead to rejection, putting a dent in your chances.
Managing your credit is just one apsect of ensuring that you give yourself the greatest chance of getting the right deal for your circumstances.
Applying for a mortgage can be a scary prospect, but, with the help of a professional mortgage adviser, it doesn’t need to be. For further information contact Romans Mortgage Services on 0118 3219 536, or visit: romans.co.uk/ mortgages.There will be a fee for mortgage advice. The amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.