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More and more people these days pay much closer attention to their credit rating, especially first time buyer in Beverley as they tend to worry about being accepted. Consumer awareness of credit scoring is higher now than ever before. We’d say at least half of the people who contact us for the first time, have already looked at their credit report online.
There are many different credit reference agencies out there. Most people will have heard of Experian or Equifax, but we recommend potential new clients to use Check My File for a 30-day free trial, which is £14.99 a month thereafter and can be cancelled at any time.
This is because of this report “sweeps” several of those reference agencies and collates the information into an easily understandable colour-coded report.
Try it FREE for 30 days, then £14.99 a month – cancel online anytime.
Often, clients ask if we will be doing a credit search on them, because they are aware that too many searches can have an adverse effect on their credit score. Lenders always run credit checks but we always seek a client’s permission before doing so. There are 2 different types of credit searches that Banks can run on a customer: hard searches or soft ones.
A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is the lender is looking into your situation quite closely. If you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on, is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed. Either that, or it turns out you have provided false details.
The bad news about a hard search though is that it leaves a “footprint” on your credit file. This means anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing, but if you have several footprints registered in a short period of time then it could look like you applying for lots of credit at the same time.
The footprint does not state whether your application was successful or not. However, if you have several searches over a few weeks, then lenders’ systems could wrongly assume you are being declined on the basis of; “Why else would you go to lender number 2 unless lender number 1 had said no?”.
The odd hard footprint on your record from time to time is no big deal. There’s no need to worry too much about this, just be careful not to have too many.
A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites. This would give you an indication of what products might be available to you. It can also be useful if someone wants to verify your identity.
Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.
You will be able to see that someone has carried out a soft search on you if you check your credit file. The good news though, is that these searches are not visible to other financial institutions like banks. This means that you can apply for an agreement in principle for a mortgage, without it damaging your credit score. This is irrespective of whether it is successful or not.
If you are wanting to make an offer on a property, we always think it is an excellent idea to have your mortgage agreement in principle in place prior to contacting the estate agent. You want to give yourselves the best possible chance of securing the property you want at the lowest price so if you can present yourselves as having your finances in place then you are definitely putting yourself in a stronger position. Having the agreement in principle also sometimes puts the agent off trying to “cross-sell” their own in-house mortgage services to you.
The two most common questions we are asked on a daily basis from first time buyers in Beverley are, “Can I get a mortgage in my situation?” and “How much can I borrow?”. In this article, we explain the latter which has changed quite a lot in the past decade.
Back in the ’80s and ’90s, most mortgage applications were manually underwritten. That is to say, there was lots of “human intervention” in the process of approving mortgage applications. You’d make an appointment with your Building Society Manager, and they would interview you.
They would encourage you to save with them for a while until you prove yourself credit-worthy. The manager would then grant you the equivalent of an agreement in principle. This would then be followed by advice on how much they were prepared to lend.
This sounds very much like a highly personalised process with a common-sense approach. That being said, it could lead to inconsistent decision-making. The manager has the discretion to interpret the lending manual. In other words, it would be possible to approach the same Building Society in a different town or city. You could possibly obtain a different outcome.
With a view to eradicating the above and more importantly, cut costs, Lenders moved to automated affordability calculations. “Caps” were applied so they would lend you more than, say, 3 or 4 times your household income.
As the 2000s progressed, lenders were becoming more and more generous in how much they would lend. Some lenders would offer self-certified mortgages. This was where no background checks would be carried out as regards how much an applicant actually was earning!
The market crashed and to all intents and purposes, 2008-2010 were very difficult years if you were trying to get on the property ladder. The lenders battened down the hatches and created a very cautious (over-corrected) lending environment.
The market recovered and in 2014 the regulator launched the Mortgage Market Review (MMR). This was a new set of guidelines for Lenders to adhere to. Gone were the old-style income multipliers which took little account of household expenditure. Before 2014, two applicants earning the same could borrow roughly the same as each other.
This was irrespective of how much they spent each month. Then came new affordability models. These took a much more forensic view of how mortgage applicants managed their money on a monthly basis.
There is still a “cap” in place (most Lenders will not go past 4.75 times your annual income) but your spending habits are analysed also. So, for example, if you have high childcare costs, lots of credit commitments and a student loan you will be offered less than your work-colleague who doesn’t have any of that expenditure.
We are still constantly surprised by the large variances lender to lender in how much (or little) they will lend. Some lenders seem to penalise low-earners (perhaps they are not looking for that type of applicant), some take pension contributions as a fixed outgoing so would often lend, say a public sector worker with a big pension deduction less than a private sector and so on.
It really is horses for courses and if you need to maximise your borrowing capability to obtain the home you need to buy then you’ll definitely need a Mortgage Broker in Beverley on your side who can research the market on your behalf to see if anyone will lend you the amount you need.
It’s very likely that you will be asked what your credit score is like when it comes to applying for a mortgage. There are a plethora of factors that can affect your credit score. For instance, the fewer addresses you have on your record, the better your credit score.
As mentioned, fewer addresses on your file can support your mortgage application when done correctly.
We do find that many applicants, particularly first time buyers in Beverley, leave their previous addresses on their records. They may have done this accidentally or as a way to keep their credit score from lowering but they do need updating.
There is a range of documents you will need to update whether it be bank statements, credit cards and electoral roll information. We do find that many applicants disregard this information as they believe it won’t harm their credit score, however, it can create a significant amount of damage.
You may be in a situation where you get an unpaid ticket that is sent through to your old address. If you don’t let the post office know to make sure all mail gets forwarded, the longer it goes unnoticed which can result in receiving a CCJ.
Receiving a CCJ on your credit file could result in losing lots of points on your credit file. This will damage your credit history and make things more difficult for you when it comes to being successful in your mortgage application.
We do recommend that you give your application a thorough check from start to finish. Begin with your address by making sure that the address on all of your accounts (credit cards / current accounts) and electoral roll are all registered to your current address.
This is usually targeted at applicants who are currently living in rented accommodation and haven’t changed their address from their previous property.
It’s best you double-check everything when applying for a mortgage just in case you miss anything. Keep on top of your address, making sure everything is updated can make a positive impact on your mortgage application.
Find out the exact date you moved into your rented apartment / new home and when you moved out. This will prevent any cross-over that may show you were living in two different addresses at once.
If you don’t do this could lead to confusing the lender and could potentially cause damage to your credit file or mortgage application.
It will be very beneficial to have a Mortgage Broker in Beverley to provide a helping hand as they will make sure your application is perfect before it’s submitted. They will also check that all information is updated correctly to have the best possible chance of being accepted.
Demonstrate to the lender that you tried your best to get your application accepted. You may have evidenced your deposit to show how you have saved up or you have consciously updated your address. Either way, it will massively help your application and impress them.
In the situation when you have an outdated address that is connected to one of your accounts, your lender will see that you didn’t check to see if any of your addresses needed updating. This could show to a lender that you haven’t taken things seriously.
To conclude, it’s important to change your address and any other factors stated above in order to prove to the lender that you are serious about this financial commitment. Therefore, we do strongly suggest that you check up on your file to make sure your application is up to date. If you are wanting a second set of eyes on your application, take advantage of our free mortgage appointment in Beverley.
Here at Beverleymoneyman, we have a team of expert moving home mortgage advisors in Beverley who are available 7 days a week. We look forward to helping you secure a great mortgage deal and get your application looking ready to go!
The amount of deposit you need to purchase a home in Beverley will entirely depend on your situation and what your property plans are. In this article we take a look at how much you might need.
In the past, it was easy to get 100% mortgages and even higher. This thankfully is not the case anymore, as it is of a higher risk to mortgage lenders. Think about it, if you are borrowing 100% of the purchase price, fall into arrears and then the property price dips, that mortgage lender is at a loss.
This is why the mortgage lender needs a deposit, so that need you to put down a deposit simply to reduce their lending risk. There is also the frame of mind that investing your own money into a property makes it less likely for you to walk away if finances get difficult.
Furthermore, it could be argued that if you are not able to save up at least a 5% deposit, are you even ready to take on such a large financial commitment like a mortgage?
No, they cannot. Previously there existed the Help to Buy Equity Loan Scheme, though this has been discontinued.
At the moment, yes 5% is enough in lots of circumstances. Not all mortgage lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify.
There are mortgage lenders out there that would consider you for a 95% mortgage with an average credit score but the rate of interest would be higher.
Many of the specialist lenders want you to put down at least 15% deposit if you have a poor credit history, once again as above this is simply to reduce their risk in case a repossession occurs.
It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not impossible.
You’ve always needed to put down a larger deposit for buy to let mortgages in Beverley and most lenders at the moment are looking for 25%.
The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.
This could be possible but the vast majority of lenders won’t let you do this, essentially this would still be 100% lending.
Yes, this happens all the time. Generally, it’s “Bank of Mum and Dad” gifting or other family members but even family friends can gift you money as long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift.
If you are buying as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the right to buy in Beverley then normally you don’t need to put any of your own money in as the equity is already “built-in” to the deal.
Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.
You may be here because built up a large amount of savings for a deposit on your first property and are wondering what’s the next stepping stone to take on your homeowning journey. The amount of deposit you need to put down to buy a property in Beverley will be determined by your mortgage goals and your current financial circumstance.
As a first time buyer in Beverley taking the first step onto the property ladder or this is your second time and are looking at moving home in Beverley, our expert term could help you. Below we have created a helpful guide that will hopefully help you put yourself in the best position to be mortgage ready when it comes to starting your application.
To start, you need to get an up-to-date credit report. By having this with you, you can provide a financial landscape to your designated Mortgage Advisor in Beverley. We do recommend that you pay off any outstanding amounts like mobile phone bills and instalments before you get a copy.
Don’t worry if you struggle to get an up-to-date credit report on time, your advisor will be able to help you with this.
Before you begin your mortgage journey. it’s key to obtain an agreement in principle. This document is important when it comes to making an offer on a property. With an AIP by your side, you are demonstrating to the estate agent that a lender will agree to lend you a certain amount from them in principle by showing them ample evidence of your income, credit history etc.
Remember that AIPs can expire normally within 30-90 days. In the case that your AIP does expire or you need support getting one, our friendly team can organise this for you usually within 24 hours of your mortgage application. Our team are here to provide you with the expert Mortgage Advice in Beverley that you need.
Prior to beginning the mortgage process, many applicants usually have a rough estimate of their expected outgoing after they move house. By working out this estimate, you can be able to have a rough idea of the amount of disposable income you have to pay your mortgage. It’s likely that you will have expenditures and regular outgoings such as credit agreements and bills to your weekly food shop. In the case where you are finding it difficult to balance out all these financial outgoings, we will happily send you our version of a Budget Planner to help you out.
It’s best to keep an organised folder with the documents you need when you are starting your mortgage application in Beverley.
Providing a form of ID will prove that you are who you say you are. This can be shown through a driving license or a passport. Keep in mind that you are not able to use the same form of ID twice so, if you use your passport for this proof of ID, you will not be allowed to use it for another proof of ID evidence and vice versa.
If you are an applicant who is a non-UK national working over here on a visa, you will need to provide that too.
Along with this, you will need to prove where you live. This may require you to provide ID and a utility bill/bank statement. It’s important that you put your current address on all of your accounts and memberships in order for them to be up to date. By doing this, you are reducing the risk of your application being harmed as incorrect or previous addresses linked with your name can cause this.
Having this document with you is crucial as it can be a big determining factor to whether or not you qualify for a mortgage. You will be required to provide and will need to be at least three months’ worth. From a lender’s perspective, they will be able to have an insight in the way you manage your money as well as what goes in and out of your account.
When it comes to outgoings, lenders do not favour regular gambling transactions along with general bad spending habits. If you are in your overdraft on a daily basis or direct debits have bounced consistently will also not put you in the best view in the lender’s eyes.
Proving your income plays a big role in the process. If you are employed, you will need to provide the last three months’ payslips along with your P60. Furthermore, overtime, bonuses. commission and shift allowance are normally factored in and taken into consideration too. For part-time employees, they will need to provide more evidence of their income. This does depend on the lender though.
If you are self employed in Beverley, assessing your income will work a bit differently. First, you will need to show a minimum of 2/3 years’ accounts and earnings from the revenue. We have a team of Mortage Advisors in Beverley who have rich knowledge of this.
The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.
Thousands of interest only mortgages are maturing every year and lots of mortgage-holders are not prepared to repay the capital sum owed. Here we examine how this situation has occurred and what can be done.
Interest only mortgages remain popular amongst buy to let applicants who buy up properties for extra income, but in the 80’s and 90’s most residential mortgages were set up this way. The idea was that you would only pay back the interest on the money you owed and you would pay back the capital lump sum at the end of the term.
When you took out an interest-only mortgage you may also have been advised to set up a repayment vehicle such as a low-cost endowment policy. The policy would then mature and was designed to repay the capital balance in full whilst also providing life cover through the term.
Unfortunately, many people weren’t made aware of the risks attached to these products, in particular, that there was no guarantee the policy would mature for a sufficient amount to repay the mortgage debt and this led to many applicants being compensated for being mis sold to.
It’s unlikely that you will have taken out an interest-only residential mortgage in the last few years as they are fairly difficult to get unless you can prove a robust strategy for paying back the capital. If you took out an interest-only mortgage in the late ’80s or ’90s and have not switched it to a capital repayment then it could be maturing soon and action needs to be taken.
If you have found yourself in this position it is highly likely that your mortgage lender will have been writing to you asking how you intend to repay the capital. It’s vital that you keep the line of communication fully open with them, they will not want to take your property into possession and will only do so as a last resort.
Here are some of the options you can consider:
The retirement mortgage market has become seemingly popular, largely due to the number of interest only mortgage reaching cessation with no repayment plan in place.
There are far more retirement products available these days and some providers let you service the interest element by way of regular monthly payments.
This means that when you die the capital balance is repaid from the house sale and the surplus passes to your family.
Interest only mortgage still have their place, for example, you may have a portfolio of properties or other investments in place to repay the money you have borrowed. Lenders will now want to examine your strategy for repaying the loan much more deeply than they did in the past to ensure they are not left with a mortgage on their books which could default.
They will want a big deposit to go down, possibly as much as 50%. They will also want to “sense-check” your plans, for example, will you have enough equity in your home to be able to down-size to a reasonable property at a later date.
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Beverleymoneyman.com & Beverleymoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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Beverleymoneyman.com & Beverleymoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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