12 January 2017
Buying your new build home will be one of the most important moments in your life; it’s a big commitment and a big investment and the start of a wonderful journey that you’ll take either by yourself or with your family. But it can also be pretty scary if you’re approaching this sort of thing for the first time with lots of jargon, rules and some pretty big numbers being thrown about.
With that in mind we have got together with The Mortgage Bureau to put together a series of articles and guides to help you navigate some of the bigger aspects of the new build home buying process; looking at different types of mortgages, help to buy schemes and the buying process in general.
Achieving your goals in any area of your life, can at times require time, commitment, control and a certain amount of sacrifice. Owning your own home is no different, and given that it can take weeks if not months to correct something that’s wrong or evidence good patterns of behaviour, it’s usually best to start as early as possible. Whilst nothing is guaranteed, here are a few ideas that will help you to get your finances into shape before you apply for your mortgage:
There are a few pitfalls that you should avoid when applying for a mortgage, here are a few things to be aware of prior to your mortgage application…
Don’t: Apply for new credit as this will limit the amount of mortgage you can get and could lower your credit score.
Don’t : Take Pay Day loans - they indicate that you can’t manage on the money you’ve got coming in, so steer clear of them at all costs as their very presence on your credit file could cause your mortgage application to be declined
Don’t: Withdraw cash on your credit card – not only is it an extremely expensive way of obtaining cash but it’s also noted on your credit file and at worst could make you look desperate.
Don’t: Use comparison websites for insurance quotations as they can result in multiple credit searches which may reduce your credit score
Don’t: Have credit you don’t need, cancel credit cards with nil balances as lenders may take your “open” credit facilities into account when considering maximum lending.
Don’t enter into any new financial associations (bank accounts /credit cards) with anyone who has a poor credit history as this will affect yours.
Don’t: Max out your overdraft each month or even worse run up additional bank charges for going over the level you’ve agreed with your bank – it’s like a red rag to a bull when it comes to lenders who may take the view that you are already over committed.
On the other hand, there are some very helpful steps you can take to make sure you’re in the best shape to get the mortgage product you need to buy your home…
Do: Pay all of your financial commitments in full and on time as it shows lenders that you have a “good attitude” to existing debt – lenders like statistics and if you have paid your debts in the past you’re statistically more likely to pay them in future, so they’ll be more receptive to giving you money!
Do: Register on the Voters Role – lenders like to know where you’ve been! If you’re not registered to vote at your current address, it can be an indication of “hidden” addresses where adverse credit is registered. Go to www.gov.uk/register-to-vote.
Do: Know what’s on your credit file and ensure that you close off any unused but still active credit by contacting the provider. Also check that your address details are correct. You can obtain a “FREE 30 Day Trial” from Experian, one of the three credit referencing agencies by visiting www.mortgagebureau.net
Do: Have try and have some credit however little - no active credit means that a lender can’t tell your attitude to debt – i.e. that you pay on time and in full. Improve your rating by using a credit card to pay for small items (e.g. petrol/groceries) and pay off the balance at the end of each month. If you don’t have a credit card then apply for one – your bank is most likely to approve you as you already have a history with them!
Do: Remove any financial associations with those who have poor credit – i.e. don’t share bank accounts or credit cards. Failure to do so could affect your ability to obtain credit in your own right.
There’s a lot of paper work involved in a mortgage application (and some of the may hoops you sometimes need to jump through en route) and it can seem quite daunting, even to seasoned homebuyers! Here’s a quick cheat sheet you can refer to and remind you of some of the important documents you need to keep close to hand.
Do: Keep your latest 12 months’ bank statements & payslips - they may be needed by your lender to verify your income, outgoings, address and rental history.
Do: Make sure your passport has not expired and that your driving licence is registered to your current address.
Do: Check that you bank statements are registered to your current address.
Do: Ensure your name is on utility bills and spelt correctly.
Do: Request a Notification of Tax Coding from the Inland Revenue to be posted to your current address if you do not receive paper utility bills / bank statements (this can take up to 10 days)
Do: Check that the name on your passport, payslips and bank statements are all the same. If not take remedial action and get them matched up.
The bank or building society that you arrange your mortgage with is quite likely to ask you for a few bits of important information to help them process your mortgage application. Here are few ways you can assist them and help things run smoothly and quickly.
Do: Identify the person within your company that would complete an income reference for you & notify them that they may be have a reference request for you and the importance of a speedy response from them.
Do: Make sure that you have full address / contact details for your employer’s registered office.
If you are self-employed Do ensure that you have your latest years’ accountants available and also your latest SA302 from the Inland Revenue. This can be requested directly from the Inland Revenue by calling 0845 300 0827
If you aren’t sure about some thing then it’s really important that you ask somebody for help. You’re never alone in this process and your lender, your home builder or agent, even friends and family who may have some home buying experience will all be on hand to answer your questions and help you understand the best way to go.
Your home may be repossessed if you do not keep up repayments on your mortgage.
If you arrange a mortgage on a St. Modwen Homes property then The Mortgage Bureau will waive their fee, otherwise there will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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