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.
Applying for a mortgage is likely to be one of the biggest financial decisions you ever make. Taking the time to prepare and really understanding what a lender is looking for – before you make your application – could not only affect you getting approved, but could also save you a lot of money in the long term.
This guide will give you some simple steps to follow to ensure you are in the best possible position to have the mortgage you can afford approved – and at the best rate.
The mortgage lending process
Usually a lender (the bank or building society) will consider the following when deciding whether to approve your mortgage application:
- The information in your application form, including your salary and employment status
- The information in your credit report
- Their own policy rules
- The amount you want to borrow and size of your deposit
- Your monthly outgoings and spending habits
- Any additional information they may hold on you.
PART 1: UP TO ONE YEAR BEFORE MAKING YOUR APPLICATION
First time home buyers don’t have it easy these days. The Mortgage Advice Bureau says that the average age of a first-time buyer is now 37, which would make a standard 25-year mortgage take them to 62.
So what’s the scenario for young people today? Watch our video to find out what some of the options are out there, and some tips for how improving their credit score can set them on the road to getting on the property ladder.
This coming weekend Experian’s experts are on the road at two home shows in different parts of the country, and we’re looking forward to meeting you.
First Time Buyer Home Show, Croydon, Sat 16 April #FTBHomeShow
On Saturday 16th April we’ll be at the First Time Buyer Home Show (free entry!) at Fairfield Halls in Croydon, from 10am to 4pm, helping to show how improving and maintaining your credit report can put you in the best position to get a first mortgage.
At 3.30pm Jill O’Connor from Experian will be giving a seminar on how your credit report is made up, what you need to look out for and how you can go about improving your financial situation.
Experian research in December 2014* found that more than a quarter of people in the UK looking to buy their first home before 2016 – around 1.81 million people – had missed credit repayments, defaulted accounts and CCJs currently listed on their credit report. Continue reading
Getting on the property ladder has changed over the last five decades, and it’s not nearly as easy to get a mortgage as it used to be.
The way we use money has changed a lot over the years. Watch the video to see how money has changed through the generations with three families we spoke with.
One news story that attracted our attention in 2015 was the one in which a bank was penalised for age discrimination after withdrawing a mortgage approval for a married couple in their 40s, on the grounds that the husband would be over 65 when the deal ended.
The Financial Ombudsman Service ruled in the couple’s favour and ordered the bank to pay them £500 in compensation, saying that the bank had relied on “untested assumptions, stereotypes or generalisations in respect of age”.
Should we be given the chance to keep up mortgage payments past the age of 65?
It’s arguable that being 65 today - in terms of health, lifestyle, fitness and expectations – is not the same as being 65 twenty, certainly forty years ago. And 65 being the default retirement age has been phased out, and people can work as long as they choose to – employers are no longer allowed to discriminate against workers choosing to work beyond 65. Continue reading
The home ownership dream can seem just that for many of us – a dream. New mortgage affordability rules – where mortgage lenders require more current financial information as well as examining your ability to pay in the future – have made the home-buying process more complicated. Add to this, booming house prices and it means that many hopeful homeowners 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.
On 1 December 2015, as trailed in the Chancellor’s March 2015 budget, the Help to Buy ISA will be launched, in which the government will make a contribution towards the deposit on a house purchase.
The scheme allows first-time or existing buyers to get onto, or move up, the housing ladder with as little as a 5 per cent deposit. Depending on your circumstances and the property you are trying to buy, such as a new build, the Help to Buy scheme can help you with an equity loan or mortgage guarantee.
Applying for a mortgage is rarely a straightforward process. In April 2014, the process was made even tougher with the introduction of the Mortgage Market Review (MMR), new rules on mortgage affordability.
A quarter claim that the MMR has impacted their ability to buy a property, while a further third (37%) report that the changes have made them feel less in control of securing a mortgage. Continue reading
Generally speaking, the higher your credit score, the better your chances are of getting your mortgage, lower interest rates, and better deals. When you make your application, the lender will use the data & information held on your credit report, as well as other information within your application, to give you a credit score. This will tell them whether to accept you as a customer or not.
Applying for a mortgage is rarely a straightforward process. Your mortgage is likely to be the biggest financial commitment you’re ever going to make – with lots of decisions to make, forms to fill in and waits for lenders to respond.
In April 2014, the process was made even tougher with the introduction of new rules on mortgage affordability. In this video, financial journalist Melanie Wright helps us find out what the new mortgage affordability rules might mean to you.