Getting a mortgage

How could joint finances affect your credit rating?

Share a credit account? Then you share credit report information too.  Sharing finances can mean you’re more linked than you think, as lenders will often look at both of your credit reports when assessing your credit. 

If and when you apply for credit together, lenders will be able to see your partner’s financial information too and may use this when they make a decision about you when you next apply for credit. So we’ve put some tips to help you get up to speed with shared finances and credit.

Five top things you need to know about love and money

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  • Financial association means that your credit report can become linked to someone else’s through joint financial activity. This could be applying for a mortgage, opening a joint credit account, or in some cases even being on the same broadband or utility contract.

 

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  • Your credit report will only contain your financial information, but will show the name of anyone you share a financial connection with. If you share a credit application, each of you would see the other’s name in the section of your Experian Credit Report entitled ‘Financial Associations’.

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14 new Garden Villages to be built across the UK

Garden Villages to be builtWe now know where the 14 new ‘Garden Villages’  - new towns to help solve the housing crisis – will be. Their locations range from Cumbria to Cornwall.

Government ministers have backed plans for a brand new wave of ‘garden villages’ with between 1,500 and 10,000 new homes, in an effort to confront the growing lack of good housing stock.

Here’s where they are:

Long Marston (Stratford-on-Avon)
Oxfordshire Cotswold (west Oxfordshire)
Deenethorpe (east Northamptonshire)
Culm  (Devon)
Welborne (Hampshire)
West Carclaze (Cornwall)
Dunton Hills (Essex)
Spitalgate Heath (Lincolnshire)
Halsnead (Merseyside)
Longcross (Runnymede and Surrey Heath)
Bailrigg (Lancaster)
Infinity Garden Village (south Derbyshire)
St Cuthberts (near Carlisle)
North Cheshire (Cheshire)

Each village will include green spaces, good links to public transport and a wide mix of house prices, including affordable homes. Continue reading

How to make your dream home a reality

Britain has enjoyed a number of property booms over the past 20 years. And despite the fact that property prices have also tumbled on a number of occasions, the average house price has risen significantly. 

According to the Nationwide House Price Index, the average UK house price went up from £54,008 at the end of Q3 1996 to £206,346 at the end of Q3 2016 – a whopping 282 per cent increase.

Unfortunately, rising house prices has meant that it has become harder for first-time buyers to get a foot onto the property ladder. Using the average house price as a guide, even if a mortgage has a 95 per cent loan-to-value, buyers would still need to find a deposit of over £10,000. Add in solicitor and estate agent fees and the initial layout can seem daunting.

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Brexit: What’s the latest, and how does the interest rate cut affect homeowners?

brexit-interest-rate2After the political whirlwind of the last couple of months, it appears the country’s immediate future may be becoming a little clearer.

Now that Theresa May has taken office as Prime Minister, she will agree the government’s negotiating position before she triggers Article 50, and officially starts the clock on the UK’s exit from the EU.

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Why choose Shared Ownership?

The home ownership dream can seem more out of reach than ever, with mortgage affordability rules making the home-buying process more complicated. And ever-increasing house prices mean that many hopeful homeowners usually have to find larger deposits than before.

According to the Nationwide House Price Index, the average UK property price in October 2015 was £196,807 – up from £173,678 in October 2013 (a rise of 13.3 per cent). On a mortgage that offers 90 per cent loan-to-value (LTV), this means finding a deposit of nearly £20,000, with estate agent and legal fees on top of that too.

More information: What type of mortgages should I get?

So what for the hopeful at the foot of the property ladder? One potential solution is part-own, part-buy – Shared Ownership. A step that yours truly took a few years back and have never regretted.

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How does the drop in interest rates affect you?

Yesterday, one month later than most experts had predicted, the Bank of England announced a historic change in interest rates, the first change since 2009 – and rather than the upward rise that had been widely predicted for the past few years, it fell from 0.5% to 0.25%.

 So what does this mean in practical terms?

Mortgages – For those on a tracker mortgage, as long as your lender passes on the cut to its own base mortgage rate (or if it is linked directly to the BoE base rate), your rate (and monthly payment) should go down.  In all, there are about 1.5 million trackers in the UK.

However, some banks and building societies have a ‘tracker floor’, which means there is a limit to how low the percentage can go above the Bank of England base rate. In this case, your rate (and mortgage payment) would be unlikely to change.

If you have a fixed rate mortgage, you wouldn’t be affected if the rates went down during your fixed period, but when the time comes to re-mortgage – or if you’re a new homebuyer – , the options open to you could potentially be more favourable, with some experts suggesting long-term fixes even going below 2%.

Savers – In the event of an interest rates cut, it may depend if banks chose to pass on the cut to savings accounts. Some savers may decide to switch to bonds or shares, which could have the effect of driving those prices higher.

For pension savers who are using an annuity, a rate cut could make annuity rates fall by putting pressure on the long-term. This could have a potential negative effect on employee pension schemes too.

Needing currency for holidays – While interest rate cuts can often mean a weakening of the pound, it may well be the case that the currency markets will have been factoring in a cut for some time already – hence there may be little change if it does eventually happen.  Interest rate cuts can be done sometimes to provide an economic stimulus – to encourage people to spend rather than to save – so perhaps this could help improve consumer confidence and boost the pound.

But what about when it does rise? - Mark Carney, Governor of the Bank of England, has warned against expecting interest rates to stay low forever in these uncertain times, and suggested that homeowners would do well to prepare their finances to be ready for a potential rise of up to 3% in the coming years.

Many homeowners, particularly those who’ve joined the market in the past seven years, will have never been faced with an interest rate rise, and tighter borrowing conditions in the future could make it harder to cope with a rise.

How your credit score could help –  Having a higher credit score could mean you get better deals or lower interest rates on credit, loans and mortgages. The Experian Credit Score is a guide to help you understand your Experian Credit Report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now.

It can also help you to monitor your progress as you get your finances in order before you apply. Getting your credit score up could open up the potential chance to get better rates.

(original post 14 July 2016, updated 5 August 2016)

Changes in home ownership through the generations

Getting on the property ladder is a lot different to how it used to be. If we compare the home ownership status of young people today to the older generation – the results show a stark difference.  Check out our Mortgage Application Guide for more information about the mortgage process.

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Remortgaging: how can I improve my credit score?

Many homeowners may find that once that their deal comes to an end, their interest rate and mortgage payments may well go up. This could be a good time to check out whether you can re-mortgage and get a lower rate elsewhere.

In this case you are generally going to be taking out a mortgage which is the same size as the one you already had. Your monthly payments may be higher or lower than you currently pay, depending on the mortgage you go for. Alternatively, you may just want the stability of a fixed rate, if you’ve been on a variable rate that you think may fluctuate.

It can take a few months to process a mortgage application, so it’s best not to wait until your current deal ends before you start looking around. Watch our new #AskExperian video to find out what some of the options are.

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Where will you retire to?

It used to be that the retirement dream was to leave the city and head for the seaside – if not the year-round sun of the south of Spain, then perhaps the clean air of the British coast.

But could it be that the emergence of the ‘Smarties’ – Senior Market Town Retirees – is set to change that?

retired-couple-in park-300These tend to be couples and singles aged 65-plus, who have chosen to move to green and pleasant market towns for their retirement . Places with a thriving community of all ages, small enough to have a ‘villagey’ feel but large enough to have all the regular amenities and social needs that they would be used to.

“Old age and retirement used to be a more homogenous group,” explained Richard Jenkings from Experian.

“In the past people would go on holiday to the seaside and then a lucky few would then retire to those same resorts. Today we still see this happening, but a rising trend is for better-off retirees to move not to the traditional sea-side resorts, but instead to pleasant, often historic, cathedral cities and quality market towns. Continue reading

Home Ownership: the generation game

At a time when younger people are finding it harder than ever to buy their first home, it’s not exactly a surprise to find out that many of them are relying on family support to make buying a property a reality.

Experian research has found that over a quarter (27%) of Britons aged 55+ have provided support to their children or others to help them buy their own property – regardless of how financially comfortable they are, and a significant proportion (15%) of those people say they are ‘not at all’ financially comfortable.

It’s a far cry from how things once were. 60% of 55s and over who have ever owned their own home paid £20,000 (that figure, in 1986, would be around £54,000 in today’s money) or less for their first home, compared to recent figures showing the UK average cost of smaller homes today as £182,926[1].

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