Barratt Homes is encouraging buyers to use the Help to Buy scheme, which is set to slash the cost of purchasing a new home to a five year low.
The Help to Buy initiative will dramatically improve the prospect of owning or moving home as it reduces the deposit required to just 5 per cent. It will also enable qualifying customers to access low cost mortgage finance.
The scheme provides new build buyers with the prospect of a 20 per cent equity loan from the Government, with no interest payable for the first five years.
However, to participate in the scheme, buyers must be attractive to mortgage lenders. So Barratt Homes has published six top tips to enable customers to get mortgage fit and avoid missing out on the home they want to buy.
Adrian MacDiarmid, head of mortgage lender relations at Barratt, said: "The Help to Buy scheme is the biggest single development in the housing market for the last five years and is already leading to surging numbers of local enquiries. However, to get on the scheme, customers must be eligible for a mortgage.
"We are urging buyers, whether first time or those further up the chain, to take a series of practical steps to make themselves more attractive to lenders. Being mortgage fit not only means winning the race to buy the home they really want, it also means getting the very best interest rates.
"There are a series of practical tips buyers can take to improve their credit score - the key factors that mortgage lenders will look at when deciding whether to offer a mortgage. Our top tips give customers the inside track on how these decisions are made and what action buyers need to take. Credit scoring can be affected by things that many people simply wouldn't consider, such as missed payments to not being registered on the electoral role."
BARRATT SIX TOP MORTGAGE TIPS:
1. Check your credit score
First of all, check your score. You can do this easily online with the two main credit reference agencies: Experian and Equifax. Ensure all information is correct and if it isn't, write to the agency and request that they change it. If you have a poor score, you will be able to start making changes to improve it.
2. Understand your limits
If you have existing credit such as credit cards and loans, you must ensure that you keep up with the minimum repayments. If you are really struggling to pay, speak to your lender as this may show favourably on your credit score. Similarly try not to get too close to your credit limit. If you do, lenders may view this as 'excessive' debt.
Missed payments, County Court Judgements (CCJs) and defaulting on credit can be why up to a third of applicants are rejected for mortgage finance. A growing percentage of applicants are also being rejected for taking payday loans and betting patterns being evident on bank statements.
3. The family connection
Details of your family's credit score are not kept on your file, so long as you don't have any joint finances. If you do, you are likely to be co-scored and this could stop you securing a mortgage. So if a family member, partner or housemate has a poor credit score, keep your finances rigidly separate. This includes joint accounts and bills under both names.
4. It's all in your history
You may not realise, but as many as one in 10 house hunters have no credit history. They are often viewed as less credible as lenders have no information to base their decision on.
Although you should never get in debt to build up a credit history, by taking out a credit card and using it regularly (ensuring you pay off the bill at the end of the month with a direct debit) you will begin to build a credit history. Another good way to build your score is by taking out a mobile phone contract
5. Get on the electoral roll
You should try to show lenders that you have a 'stable' lifestyle, for example, you are in full time employment and live at a fixed address. If you aren't already, register for the electoral roll as you're unlikely to get credit without it. Also if you can, provide information such as a landline number rather than a mobile number.
6. Be consistent and double check
It sounds simple, but one slip up on the application form could scupper your chances for securing a mortgage. This could be from a simple mistake, such as putting a salary of £3,000 instead of £30,000 but it could also be from inconsistent information (even on other mortgage application forms) as this can flag up possible cases of fraud and could slow down or stop your application altogether.
Also bear in mind that submitting numerous applications in a short space of time could have a negative effect as lenders will worry about why you have been rejected before.
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Some information contained herein may have changed since it was first published. SmartNewHomes strongly advises you to seek current legal and/or financial advice from a qualified professional.