Research found that many buyers seriously lack knowledge of the application process, with 48% of respondents completely unaware of the new affordability rules that came into place in 2014.
There’s more to applying for a mortgage than finding the right deal and hoping for the best. Not only do you need to have amassed a suitable deposit – a difficult feat in itself – but you need to make sure that your credit score is up to scratch, and unfortunately, far too few people seem to realise the importance of it.
For example, research from Equifax and What Mortgage Magazine found that many first-time buyers seriously lack knowledge of the application process, with 48% of respondents completely unaware of the new affordability rules that came into place in 2014.
This in itself could be a disaster – the Mortgage Market Review (MMR) implemented strict affordability rules that all lenders have to abide by, and if you don’t meet the criteria, you won’t get your mortgage. Essentially, you have to prove that you can afford your mortgage repayments – not only now, but also if mortgage rates were to rise – and you’ll need to show that you’re a responsible spender. You can find out more about the MMR, and make sure you’ll meet the criteria.
But that’s not all; the research also found that many are unaware of the factors that could affect their credit status and ability to secure a mortgage. For example, while 48% of respondents knew that credit issues could have an impact on their application, just 5% knew that having CCJs could have a similar influence, and only 3% thought that not being on the electoral roll would prevent them from securing a mortgage.
Furthermore, just 1% believed that previous bankruptcy could have an impact and the same proportion thought that being a victim of identity theft could jeopardise their chances of securing a mortgage deal, when in fact, all of these factors – and many more besides – could reduce the likelihood of acceptance.
This is for the simple reason that they all take their toll on your credit score, which is why it’s so important to be in the know. Happily, 52% of respondents sought a copy of their credit report before they applied for a mortgage, but 17% didn’t, and it’s these borrowers in particular that could be putting themselves at risk of having an unsuccessful application.
If your credit rating isn’t good enough, you’ll find it difficult to get a mortgage, so doesn’t it make sense to check your score? This can be achieved by heading to a credit check provider – Experian CreditExpert, for example – many of which will give you a free trial so you can look at your score and credit history without paying a penny.