As a First Time house buyer there is more to consider than simply getting a deposit together (although that is of course an important element).
I've pulled together a few quick tips for First Time Buyers, or indeed anyone who is thinking about buying a property via a mortgage.
Voters Roll
The electoral roll (voters roll) is used for more than just voting, it is an essential tool for verifying the identity of individuals. Mortgage lenders have access to this information and can use it to confirm your address history.
Credit Check Yourself
Credit reference agencies hold a vast array of information about all of us. Every loan, credit card, voters roll status, account balances and many other details are all recorded and made available to Mortgage Lenders, and any other financial institution whenever we apply for credit.
This information is also available to you. For a small fee you can get your full credit file. Do this, and you can see what prospective lenders can see.
For Experian click here Experian Credit Report
For Equifax click here Equifax Credit Report
Pace Yourself
Another thing you can do to improve your credit status (or rather, not to harm it) is to resist making too many applications in a short space of time. Too many credit applications on your credit file can make you appear desperate in the eyes of a lender. Remember; it's not just loan applications result in searches being recorded by Credit Reference Agencies, any kind of finance, mobile phone applications, and landlords searches, amongst others, show up on your credit file.
Try to spread out applications, particularly in the 12 month period before applying for a mortgage.
Too many or too few?
Credit cards (including store cards) will, as I've mentioned show on your file. If you have cards with no balance, some lenders may worry that you have too much potential credit available.
Close down any accounts you don’t need. However; it is also important not to overload the cards you keep, as 'maxed out' credit cards can also look bad on your credit file.
Too much or too little?
Mortgage and other lenders will regard too much credit a sign that you are struggling with your finances and you will be considered a higher risk. At the same time, avoiding credit all together means that potential Mortgage providers have nothing to look at when assessing your credit worthiness.
A little credit, in good order, is a great advantage when applying for a Mortgage.
Pay-day Loans
Avoid pay day loans at all cost. These small, high interest loans give Mortgage lenders the impression you're struggling with your finances and are desperate for money. Having a pay day loan on your credit file will make obtaining a Mortgage much harder.
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