So you're Thinking of Buying Your First House?
It’s all about your CREDIT SCORE
Mortgage lenders will request a copy of your credit report; they use this to decide whether you qualify for mortgage lending. The higher your score, the easier you will find obtaining a mortgage. Make sure you take the time to check your own credit file.
Simple tips to help improve your credit score
The Electoral Roll
Make sure you’re on the Electoral Roll (sometimes called voters roll). Mortgage lenders like to see a 3 year history, it will help your credit score no end. Being registered on the Electoral Roll is a quick, simple way of improving your Credit Score. Do not rely on anyone else to do this for you, contact the relevant local authority/council
Outstanding Credit
Credit Commitments – It’s all about Direct Debits. Never leave anything to memory. Set up a Direct Debit to make at least the minimum monthly payment required, ideally pay off in full. Remember if you’re not paying by direct debit always allow time for the processing of your payment, ideally 3 days before the due date on statement. Whether it’s a credit card, store card or catalogue, missed payments and defaults will seriously hinder your ability to obtain mortgage finance.
Deposits
Deposit – quite simply the more deposit you have available, the easier you will find the whole process of passing credit score and obtaining a mortgage, you will also find the interest rate more competitive.
Employment
Employment – lenders love to see consistency and a steady employment history, multiple jobs in a short space of time are a potential issue. If you are thinking of buying a property, give this some thought. Ideally 12 months employment history would be a good starting point. Most lenders will normally ask for your last 3 payslips and in some instances a P60.
If your self-employed normally the lenders will require 2 years proof of earnings. Most lenders will want to see your SA302 Tax Calculations and corresponding Tax Overviews. A limited number of lenders will accept 1 year’s proof of earnings however, interest rates tend to be higher, and a larger deposit may be required.
What you need to do before thinking of buying your first home...
- Get registered on the electoral roll
- Set up direct debits for regular payments for credit cards
- Start saving a deposit - aim for 10%
- Keep your employment consistant - don't job hop!
