What to do for the best? To get a mortgage.

highjewelgreen

Hello there,

I wonder if anyone can offer me a little advice. I would really like to get myself in a better position to apply for a mortgage (I am hoping in about a years time) and have a few questions on how to best do this.

I have had a bit of a rubbish past with money, I was in a lot of debt but have thankfully paid all of that off (except a student loan). I never got any CCJ's but I did have some late payments. I have just got a credit score from Equifax and it is showing as 'Fair' and a score of 398. I have had a couple of late payments a year the last one being June 2013. I am also on the electoral role. My questions are these:

- I have a couple of credit cards still open with a zero balance, is it best to close these, keep them open with a zero balance or spend a little on them every month then clear them off straight away?

- Is it better for me to save money for a deposit or pay off my student loan?

- Is there anything else I should do that would help?

I would appreciate any input you have....

Thrugelmir

Active use of one credit card does no harm. Particularly if balance is cleared every month. Cancel any cards that you don't require.

Clearing your student loan will be beneficial if for no other reason than the debt will be gone. Particularly if you are seeking a high LTV mortgage.

Make sure you register on the electoral roll every year.

Consider saving regularly with a lender that you might borrow from. Saving demonstrates an ability to manage your money. So will earn you brownie points when it comes to the time for applying.

Tixy

highjewelgreen wrote: »

keep them open with a zero balance or spend a little on them every month then clear them off straight away?

Better to keep them, use them and the repay in full each month - pay them after the statement is generated, not straight away.

highjewelgreen wrote: »

- Is it better for me to save money for a deposit or pay off my student loan?

If this is a new style loan where money is deducted from your salary then likely best to just pay the set amount to this, not to make overpayments.

highjewelgreen

Thank you both, That is really helpful. Am I right in thinking that the mortgage lender will only be able to see late payments for the last 6 years?

Also I have claimed back PPI from a couple of places will they be able to see that I have done that?

Tixy

They won't be able to see you have reclaimed PPI.

In terms of missed payments they can see the last 6years history. But if an account has been closed say a year ago, they see the 6years up to the date it was closed. But the older the missed payments the less likely they are to have an impact on any lending decision.

highjewelgreen

Thanks so in which case if I have accounts still open at with missed payments then it is best to keep them open rather than close them?

Tixy

Arguably in the long term it is better to keep them open.

But if its just an odd missed payment here and there it won't make a massive difference. A potential lender would probably pay very little attention to missed payments that were more then 6years ago.

rebm11

I filled in the form that you use to vote back in December and when checking my Experian report it doesn't say that I am on the Electoral at my current address even though I have been here for nearly 2 years (filled out two Council Electoral forms) it just said that I was on the Electoral at my parents...