First Time Buyers Advice

Dramatic_Star

Me and the OH have been renting for 2/3 years and have recently started saving for a deposit on a house. We are realistic and know what we need to save a lot than you would have to a few years ago & we both work fulltime and have the potential to save a fair bit in time to buy in 2010/2011.

The only problem is, I have a low credit rating- not due to poor money management, but because I've never really borrowed anything in the past. I now have a credit card, which I've had for almost a year upon which I put around £100 a month on and pay it off straight away. I have heard however that when applying for mortgages, they look at your credit rating and score and if you pay off your credit in full each month, you are considered an un-profitable borrower and therefore the score will be low. Is this true? My OH never has any problems borrowing money, but neither of us have borrowed a large amount in the past. Is this going to effect us?

Basically I'd like to know ways in which we can improve our chances of getting a mortage in the next 1/2 years so we can start putting the plan in action now.

Thanks for any advice in advance.

CLAPTON

why do you say you have a poor credit rating?

if you have a CC and use it as described plus being on the electoral roll plus there being nothing bad on your credit file then you will be fine.

save as much as possible for a deposit.. think at least 10% and maybe more and then there's no reason why you shouldn't get a mortgage

wilkinho

Hi there,

I'm saving up for a deposit on my house and ive heard that lenders are increasing there deposit to upto 25%. does anyone know if this is the case? i know in an ideal world buying the house either outright or with a high deposit as possible are the better options but if there is a property bargain there i want to know that i could go a lender and "tick all the boxes" as it were

cheers

feisty1

Dramatic_Star wrote: »

and if you pay off your credit in full each month, you are considered an un-profitable borrower and therefore the score will be low. Is this true?

Rubbish! People are getting mixed up with stories like when Egg cxd some customers cards for this reason

As has been said........Keep on saving, pay yr bills on time, obtain a copy of yr credit file Equifax it can be done on line just check everything is ok, make sure yr on the electoral role, keep p60's/p45's if u change jobs & good luck

feisty1

wilkinho wrote: »

increasing there deposit to upto 25%. ????cheers

not sure what u mean?

wilkinho

apologies....i meant a minimum deposit of 25%

sorry....

feisty1

that would mean you would obtain a 75% mortgage, no you can borrow more that that BUT rates are higher, with falling property prices, the higher u borrow the nearer to negative equity yr becoming..........not a good idea..as for bargain properties most are snapped up quickly by professional investors

Dramatic_Star

feisty1 wrote: »

Rubbish! People are getting mixed up with stories like when Egg cxd some customers cards for this reason

As has been said........Keep on saving, pay yr bills on time, obtain a copy of yr credit file Equifax it can be done on line just check everything is ok, make sure yr on the electoral role, keep p60's/p45's if u change jobs & good luck

Friends recently got refused for this reason- because their credit score was too low. Credit rating was fine. This was with one bank, but they were accepted with another.

Thanks all for the advice. Guess the best way is to keep saving as much as possible.

feisty1

Dramatic_Star wrote: »

This was with one bank, but they were accepted with another. Thanks all for the advice. Guess the best way is to keep saving as much as possible.

You have to have a credit trail as the purpose of doing a decision in principle is for a lender to see how you have conducted yr credit. So you could be refused on the grounds of no trail, but the fact is you do have a credit trail and you're conducting this satisfactorily. You don't get penalised on mortgages for being responsible with CC's.........As I said this was something Egg Credit Card adopted, they looked at accounts they didn't feel profitable & invited them to leave!

Nonshy

Mortgage companies are not like CC companies... they charge you interest every month no matter what!

Dramatic_Star

Thats what I was thinking. Ah well- maybe they got a little confused.