There is a small minority of people who are so spontaneous that they wake up one day and think ‘I’m going to buy a house’, and then they go out and do it without any fear or concerns. For most of us, buying a house isn’t something that we jump into so quickly. We weigh up the pros and cons for months, working out if we can afford it. Thinking about if it’s a good time to buy, are house prices moving up or down? What type of house do you want to be looking for? And how long do you plan to be there? These aren’t questions you should answer overnight, and you would be right to mull it over for months before you even start to think about putting bids in for properties.
Taking your time, doesn’t mean you shouldn’t start setting the groundwork as soon as possible. The obvious one, is to make sure you have a sufficient deposit. You also need to make sure your credit score is as good as possible by the time you are applying for your mortgage. You can’t work miracles in say a period of just a few months, but you can make the best of what you are working with. You can do this by doing things such as making sure you are on the voters’ roll, closing any unused credit accounts you may have, making sure you don’t miss any payments whatsoever. By signing up to one of the credit reference agencies, you can find out the steps you need to take in order to sort your credit files out, and doing so as early as possible is the key. It is no good in trying to sort your credit file out on the day you want to apply for a mortgage, because there are time delays in the system, and things usually take at least 4 weeks to up update on your records.
A less obvious thing to set straight is your bank statements. Most lenders ask to see 1, 3 or 6 months’ bank statements from you, and now more than ever, they are going to look at every detail and transaction. If you can, you should clear your overdraft, or at very least make sure you are not going over your agreed overdraft limit. Try not to overspend on luxury items. Stay away from gambling websites, lenders don’t like seeing this, and while it may not be a deal breaker on it’s own; it helps them build up a picture of your profile. This can be unfair, as some people may only use gambling sites when for example, the grand national or the world cup is on, but lenders won’t see it that way unfortunately. If you don’t need to save for a deposit, then try to chip away at debts too.
If you are a first time buyer, you should consider building a credit history of some type in a way which you are comfortable with. Wheather that is trusting yourself to use a credit card sensibly, taking out a small personal loan just to pay it back, or getting added to a parent’s credit card to share some of their credit usage.
If you are unsure what steps you should be taking, you should seek advice from a mortgage broker or financial advisor, so they can help you set up a plan. There is never a time which is too early to get your plan together, but there are times when it is too late.
Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in mortgages and investment advice. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde CertPFS
7th July 2014
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