The following article is a guest post.
If you are looking into buying your first home at the moment, the thought of whether or not you will be granted a mortgage no doubt fills you with dread. Thankfully, there are a few things you can do to improve your chances of gaining that first time buyer mortgage. Keep reading to find out how to make yourself more appealing to the lenders.
Analysts have spent the last few years predicting that it is only going to become tougher to get a mortgage as lending criteria is tightened – meaning that those with poor credit scores will stand less chance of being able to buy. To stop this happening to you, the first thing to do is to get a basic version of your credit report. There are many providers who will be able to provide you with this for free or at minimal cost. Once you have received it check through your entire report to ensure that all the information included is correct. If you find an error, contact the credit reference agency to get them removed.
One of the main factors lenders use to decide whether or not they can trust you to repay your debt is how you have handled credit in the past. If you have a long history of taking out credit and paying it back in line with the agreed terms, you are much more likely to receive a first time mortgage as lenders will see you as a safer bet than someone without any credit history at all.
This means that if you have never borrowed at all, lenders have no idea how good you are at paying back, and may well refuse your mortgage application. If you are in this position, the best practice is to take out a credit card, use it a few times a month, then ensure you pay off your balance to avoid paying interest. This will help build up a positive credit history for you, and your chances of receiving a mortgage are greatly increased.
Although smaller deposits are increasingly becoming common place, the fact still remains that the larger the deposit you can make the better the chance you have of receiving a mortgage. It is recommended you attempt to save up at least 10 per cent of the total price of your new home if possible to improve your chance. Raising a larger deposit will also mean you get access to lower mortgage rates too.
Speak to different lenders
Despite all of this, remember that all lenders are different, so just because you have been turned down by one doesn’t mean you will by all. To improve your chances considerably, speak to a mortgage broker before you go to a bank. They are likely to know which banks or lenders are right for you, so a quick chat with one of them should help you navigate the process.