First Time Buyer - October/November 2021

Page 30

MORTGAGES

MORTGAGE MISUNDERSTANDINGS New research from Experian found that nearly two fifths (38%) of Brits said they were considering buying a new home within the next five years, rising to 66% of people in their 30s and 67% of those in their 20s. From this research, Experian has found common misunderstandings in the mortgage application process and is helping to clear up assumptions to help people secure their dream properties People also suggested they are prepared to stretch themselves to secure their ideal home, with nearly one third (31%) saying they would buy a property even though it could mean a very small

amount of disposable income left each month. Yet, even though they want to own a home, 49% of people in their 30s and 42% in their 20s were worried that they’d never appear “mortgage-ready” to providers.

Also, nearly one third of consumers (27%) said they were unsure of how to prepare to get a mortgage. experian.co.uk

FACT OR FICTION: MORTGAGE ASSUMPTIONS EXPOSED Perception

Fact or fiction

Experian says

You can’t get a mortgage if you’re in debt

Fiction

Over three fifths (62%) said it was either not possible to secure a mortgage when in debt, or were unsure whether they could do so. Remember, you should only get a mortgage if you can afford the monthly repayments. Any existing debt you have will be factored into a mortgage lender’s assessment of your “affordability”. There are many reasons people can go into debt, from taking a loan out to pay for a car, or even paying for a course upfront to further their careers. Making regular, on-time payments to reduce any existing debt can increase your credit score and help you appear more attractive and mortgage-ready to lenders.

Comparing mortgages online Fiction can impact your credit score

A total of 58% of consumers either thought comparing mortgages online would affect their credit score, or they were unsure if it would. Searching for mortgages before you apply has no impact on your credit score. Free mortgage eligibility checkers, like the one Experian offers, allow first time buyers and those wanting to move home to see how much they can borrow, as well as the different mortgage options and interest rates on offer.

You should only apply for a mortgage once you’ve found the property you want

Fiction

The survey showed that 54% of people thought that this was true, or were unsure about this. In fact, people should start the mortgage process earlier, and before finding the home they want to buy. You can secure a decision in principle with a lender before formally attempting to secure the mortgage loan, which will give you an accurate idea of what you can borrow. This will help guide your property search as it gives you an idea of budget, and some estate agents expect people to have an offer in principle in place before a property is bid on, or even viewed.

Missed credit card payments Fact can impact mortgage options

Over a quarter (26%) thought this was false or were unsure of the answer.

You can only get a mortgage with the company that you bank with

Fiction

Almost a quarter (24%) of Brits are either mistaken or unsure about this.

Credit history is important to getting a mortgage

Fact

A single recent late payment can wipe around 130 points off your Experian Credit Score. Understanding your credit score and how it could be improved is the first step to ensuring you are in the best possible position to apply for a mortgage. The higher your credit score, the better your chances of being accepted for a mortgage, and at the best rates.

You can look for a mortgage with lots of different providers – and the most important thing is to find the one that’s right for you. In checking which mortgages you are eligible for online and for free, you’ll find out what the best rates are. One fifth (19%) of Brits thought credit history wasn’t important or didn’t know that credit history was important in the mortgage application process. Looking at your credit report will help you to see what is impacting your credit score. Reports generally cover your financial track record over the past six years. The sooner you understand what your credit score is and take steps, if necessary, to improve it (for example, by addressing previous debt problems), the better.

30  First Time Buyer  October/November 2021

FTB 30-31 Experian October-November21.indd 30

13/09/2021 16:33


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Articles inside

Agony Agent

8min
pages 116-118

20 Questions

5min
pages 134-136

As a first time buyer should I consider arranging a Will?

8min
pages 124-125

Market

7min
pages 114-115

Finance

7min
pages 112-113

We are Laurus Homes

57min
pages 36-71

First home, first meal

2min
page 106

Buying a shared ownership home

3min
pages 110-111

Fast food

3min
page 107

Hotspot

8min
pages 72-73

Buying with friends or family

3min
pages 108-109

Hotspot

8min
pages 32-35

Mortgage Misunderstandings

5min
pages 30-31

First Time Buyers Focus on the Future

15min
pages 24-29

Developer’s doctor

4min
pages 18-19

House Hunter

7min
pages 16-17

The View: Henry Holland

7min
pages 20-23

At home with Charlotte Turner

6min
pages 14-15

FTB loves

3min
page 11

Words from Jonnie

4min
pages 9-10
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