Finances boydens.co.uk 16 Credit commitments A common misconception is that someone cannot gain a mortgage because they haven’t had loans in the past, although there is some basis for this. A good payer with a proven track record is a good option for lending as we discussed, but you can display this without signing up to costly loans that you do not need. A credit card could be an option that you do not have to spend money on frequently, and will still display that you are a responsible borrower. To keep it active, you could make a small purchase on it every few months, and pay the balance each month to improve your score over time. If you have a phone contract or any utilities and bank accounts, this should give enough information to most lenders in order to review your behaviour. Income to outgoings Although affordability multiples are widely talked about, most lenders use calculators to determine your maximum borrowing, so be careful about what you sign up to. Large credit commitments can reduce your borrowing potential, although this is relative to income. There may be a difference between the impact to maximum borrowing of a £300 per month car finance from someone who earns £50,000 p/a compared to someone who earns £15,000 p/a. The total amount of debt outstanding is important, but monthly outgoings are often key when determining borrowing levels. “I call my clients around six months in advance of their f ixed term end date so that we can start planning, so it is a good idea for current mortgage holders to start to review their f inancial situation around this point.” Deposit and organisation There are 95% loan to value mortgages available at the time of writing, although a higher deposit amount will put you in a better position. It is worth researching your borrowing potential as you look to save so that you have something to work towards. Contacting a broker or even your own bank is a good step for asking some questions in advance so that you know that you are on the right path as you look to accumulate a deposit. When looking for a new mortgage, I call my clients around six months in advance of their fixed term end date so that we can start planning, so it is a good idea for current mortgage holders to start to review their financial situation around this point. Keeping your credit checks to a minimum In the build-up to applying for a mortgage, be careful to keep your credit checks to a minimum as an accumulation of checks can start to impact your score and resulting ability to borrow. Opening up credit such as bank accounts and credit cards as well as gaining agreements in principle can all leave a footprint, so be careful with how much activity there is during this key period. Article by Chris Pargin of Pargin Financial Solutions. Contact Chris on [email protected] or 07398163663. Pargin Financial Solutions Ltd and Boydens are separate entities. For estate agents, Pargin Financial Solutions Ltd acts as introducers only
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