Securing a mortgage is a difficult feat. The average age of a British first time buyer is now 30, meaning it's taking us far longer to get onto the property ladder than our parent's generation. Finding your feet in the mortgage haze is tough, but finding a low rate is even harder.
Here are some tips to help you secure a low rate mortgage in the UK.
Improve your Credit Rating
A good credit score is essential to get approval for a mortgage as it allows the lender to predict your financial future and assess if you are a feasible candidate. Your credit score is the open door to your financial history, whether this includes loans, credit cards or overdrafts.
If you have a bad credit score, there are many different ways it can be improved. Pay bills on time, consider a credit rebuild card, assure that any accounts (including bank accounts, forgotten credit cards and phone contracts) are registered to the correct address, and reduce debts.
Consider the Help to Buy Scheme
In the UK, the government backed Help to Buy scheme assists people in buying their home. You still have to save a 5% deposit, but the scheme will provide up to 20% of the home's value on properties up to £600,000. This means that you will only need to secure a mortgage of 75% of the property's worth.
There are two types of assistance: a Mortgage Guarantee or an Equity Loan. The former is available for any type of home, while the latter only applies to new builds.
The advantage of Help to Buy, is that for the first five years, there are no loan interest charges. However, this scheme does not allow sub-lets.
Buy Before Starting a Family
More Brits are having to rent for a longer period of time before they can save the minimum 5% deposit and secure a mortgage. This means that many couples are choosing to start a family in their rental home, but stringent affordability criteria introduced in 2014 means having children could make it harder to get a mortgage. This criteria has enabled lenders to question how much you can afford, viewing children as a large financial commitment that has to coexist alongside monthly mortgage payments.
If you have children, then please don't panic. Talk to an advisor to find how you can secure a mortgage.