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01 Jun 2009
How to get home loans
Mortgage lending has actually got a little easier of late, partly because a lot of money has been put into supporting the banks and partly because lenders are beginning to sense the bottom of the market.
Halifax, for example, recently launched a 90 per cent mortgage at 4.99 per cent - the first of its kind in quite some time - which is a sign that things are beginning to thaw.
Credit checking is still a little more stringent, though, so you'll need to be organised if you want to boost your chances of a good deal. Here are ten top tips from creditexpert.co.uk to keep in mind:
Ten Tips: How To Get The Loan You Want
1. Use A Broker: Preferably a whole of market broker. Some offer a free service and good advice. They'll be able to give you advice on how much you'll be able to borrow.
2. Do A Credit Check: Check your credit report - lenders use it when they decide whether to make you an offer and what interest to charge, so you should see what they'll see. Look for errors or misunderstandings and correct them.
3. Have A Credit History: If you're a first-time buyer who has never borrowed money before you will need to create a credit history. Take out a small loan or credit card and repay it in full and on time, every time.
4. Make Sure You're On The Electoral Roll: The electoral roll helps lenders to check that you live at your current address and that they have been given all your previous addresses.
5. Don't Ask For Too Much: Be realistic about the amount you can borrow - don't ask for more than you can afford to repay. Most mortgage lenders still require a 25 per cent deposit for their best deals these days, so it's better to wait and save up than take a deal you might have difficulty servicing later on - interest rates may well go up in future.
6. Pay Off Debts: Past debts or missed repayments are part of your credit history and may put lenders off. Pay off as much as possible before making any new applications and add a note if special circumstances explain previous problems.
7. Do Your Research: Each lender has a different ideal customer profile so look for the ones that match your circumstances and offer the best value to you. Online price comparison sites can help.
8. Don't Fire Off Multiple Applications: Each one triggers a search of your credit report and lenders who see lots of them in a short period could suspect you're desperate for money or even think a fraud is being planned.
9. Cut Old Ties: Make sure you're no longer financially associated with former partners, as their credit history could affect your ability to borrow, so close old joint credit accounts, such as cards or loans.
10. Do A Budget: Once you know how much you can borrow, do a budget so that you can cover other costs in the moving process (fees etc) and so that you're sure you can cover your monthly mortgage payments going forward.