Steps to take before going for a mortgage

AaronH_2

I'm 21 years old, and for the last 3 years I have been savings to get a mortgage, now I can have the remainder of the 60% deposit in the next 18-24 months, since 18 I have been systematically acquiring credit, low amounts, high amounts, repaying minimum payments, up to around 10x the minimum payment each month, but never paying in full considerably early never missing a payment and so on in order to increase my credit score for a mortgage.

Now that the mortgage is in sight, I am paying off every penny I owe, I just want to know if there are any more steps I can take to increasing my chances of getting a mortgage.

I did have a few payday lones early last year, as at that point after I had any salary, put money into a savings account and absolutely everything I needed was accounted for, I would pay the rest out to whatever credit I thought needed attention, sometimes forgetting to pay something, then needing a payday loan to pay it (I quickly learnt, and started putting spare money on credit cards, incase I'd forgotten about something - could always pay it off a credit card, before setting everything up on direct debit though a credit card with would take the full balance out of my account every month)

I have been saving since I got a job just before I turned 18, and don't want to get rejected. My credit score (although fairly irrelevant) is around 650 at the moment, due to around £4,000 being owed out, but that would increase significantly once everything is paid off (before putting 2k on a credit card, was in the 'good' area)

I'm on £22,000 a year, with a raise of 3k a year for the next 3 years, which would put me at £31,000 annually before tax, I'm looking for a house in the 190k-220k region on a long term (35 year) mortgage, as afterwards I want to buy and rent properties, so want a small repayment on my house to cover me if the worst happens. Any help would be greatly appreciated

Thrugelmir

Payday loans are a no no.

Credit cards per se do not improve your "score".

Paying the balance owed on a credit card every month in full provides a lender with a degree of assurance.

Make sure your are registered on the electoral roll every year - this is a must.

Save with a lender from whom you wish to obtain a mortgage. This will give you brownie points and give you preferential treatment in certain circumstances.

AaronH_2

Thrugelmir wrote: »

Payday loans are a no no.

Credit cards per se do not improve your "score".

Paying the balance owed on a credit card every month in full provides a lender with a degree of assurance.

Make sure your are registered on the electoral roll every year - this is a must.

Save with a lender from whom you wish to obtain a mortgage. This will give you brownie points and give you preferential treatment in certain circumstances.

Payday loans I realised were a bad idea since I learnt that even when repaid properly, are harmful, I already have my 'mortgage' account with the bank I want my mortgage with, all the savings towards the deposit so far are in there, plus another generally savings account, anymore info on why credit cards don't improve your score? I assume having them don't alter your score, but surely repaying properly without missed, or late payments is a good thing? I can't see how logically a credit card is any different essentially to any other sort of credit, and if repaying a credit card always paying above minimum payments, and without missed or late payments doesn't affect your score, then the only thing what can improve your score is minimum credit used vs credit given kinda thing? I have avoided paying everything in full considerably before any agreement? Since removing anything owed to credit cards, I have always paid in full every month, but that's just because I use a specific credit card to organise direct debits. But before that I though if I always paid everything up early, companies who gain from longer term credit agreements wouldn't see any potential profit from me. Sorry, just trying to understand. I have been on the electoral roll since I was 18, lived at this address since I was 8. (staying with my mother) never want to be 'renting' would make it so much harder to get to the point of owning.

I would also like to add that I do understand that 'scores' are meaningless in a sense, but I guess they give a reference to work with and some idea of what a lender sees

Thrugelmir

Credit is spending tomorrows as yet unearned income. Fine in principle. Until financial distress strikes. Cause of which could be any number of triggers such as sickness, redundancy, relationship breakdown, unexpected major bill (car repair) for example. Then life becomes far more difficult. For many people an endless hamster wheel. Debt at some point has to be repaid.

Credit cards are dangerous as easy to loose track of spending. Few pounds here, few pounds there. Over time the balance increases. Whereas a loan for a specific purpose such as buying a car. Is a fixed term commitment as there's a definitive repayment schedule. Which is far easier to budget for.

If you save the cash before buying anything you'd be surprised how much further your money goes. Also how much more careful you'll be when you come to actually spending the money.