Even if you have some equity in your current home, chances are it will be harder for you to get a mortgage today than five years ago.
While you can never say with certainty that you tick all the boxes, there are some simple things you can do to negotiate a better mortgage rate.
You can follow all or some of these steps today to improve your creditworthiness.
Sort out your credit file
Remember, if you go for the free option, remember to cancel before you get charged!
This is the same information the lender will see when they are evaluating you for your mortgage. So read through it carefully.
If you see mistakes, you need to get in touch with your lenders and contest what you think are inaccuracies.
Three quick and easy things you can do to improve your credit score:
- Sign the electoral roll
- Stay with your current banking provider
- Live at one address for at least 2 years
Leading mortgage experts recommend you start doing these simple things now before you have started to search for a new house.
As following these simple steps will help you to reduce the risk of losing that dream property as you don’t have the finance in place.
Show the bank you can manage debt responsibly
Banks works on trust and the best way to build trust is to prove you can borrow money responsibly. Many fall victim to the myth that borrowing is bad. When in fact, it shows a lack of experience in managing debt.
Luckily, you can easily start to build trust today.
Your bank probably will offer you a 0% credit cards each year. If they don’t, ask for one. It’s worth taking out at least one, 0% credit card. Use them for your daily shopping, but don’t abuse them.
Pay off the balance at the end of each month and don’t default. This way you’ll build up a better credit history and lower your lending risk.
Lower your overall debt or get out of it altogether
This may sound contradictory to the last point. However, there’s a difference between using a 0% credit card for purchases you have the money for and using debt to make ends meet.
It’s worth seeing if you can start to pay down any long-term debt you have. So start a budget and get on top of it. Get it sorted quickly and most importantly, start today.
Do your homework
A little-known fact is some each lender has its own type of prefer borrower.
A good broker will be able to increase your chances by only applying to lenders who are more likely to lend to your type of situation. You won’t know 100% but it will help you narrow your options.
Check what banks are NOT lending for
Some banks won’t lend on certain types of properties. You might want a quirky cottage complete with a thatched roof which needs a full renovation.
However, the bank is likely to be more conservative. So your application will either be a straight no or a lower than needed mortgage amount will be offered.
Also, they could be less willing to lend on new city centre builds. Some say properties occupied in the last three years, some say any properties occupied in the last year.
Sadly, each lender works on their own requirements, which can cause confusion. Read the small print and ask the advisor/broker the somewhat seemly dumb questions.
Remember if you’re unsure at the end of the meeting, then you haven’t asked all the questions you need to or you have picked a bad advisor and you need to find another one.
That’s how to negotiate a better mortgage rate. It’s simple to make any or all of these changes. So which one will you start with first?