davidimurray
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| posted on 3/11/15 at 09:59 PM |
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Mortgages, credit scores and available balances
Any experts who could offer a bit of advice?
The wife and I are looking to get a mortgage in the new year. My credit score is excellent and hers is fair, but only just below the good boundary by
15 points. Looking at her credit file, there is a warning about her credit card debt versus available balance which is 61%. About 6 months ago she
re-organised her credit card debts to get 0% deals and reduced her available credit limits at the time, thinking that was a good thing to do.
My question is threefold :-
1) What does the available credit/debt need to be below to raise her score?
2) Is it worth raising the credit limits to get the ratio down? Will that have an affect on mortgage applications?
3) What is the relationship between available credit and the amount they will lend on a mortgage. We are looking for about a 92% mortgage so
don't want to kill that if the avaiable credit will affect it.
Any advice much appreciated.
Cheers
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daniel mason
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| posted on 3/11/15 at 10:12 PM |
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It depends on what you own, how much you owe, how much you earn, any current outstanding finance you may have,deposit size,local occupancy clauses etc
it's a minefield!
They won't throw money at you, but if you can get a decent deposit (I'd be looking at 10% as a bare minimum), don't have any current
finance (cars etc) and earn a decent amount then you'll probably get a deal close to what your expecting! Nows a good time to borrow
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Texan
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| posted on 3/11/15 at 10:37 PM |
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Since I own a mortgage company in the States so I deal with this all the time.
I'm betting most of our credit scoring system translates to yours because it's so basic
Actual payment history is a little less than 1/3 of your scores.
Available balance, how much you've got left between your present balance and your credit limit, is just as important as your credit history. In
other words don't close your accounts when they are paid off as that available credit helps keep your scores high.
The fact that you use credit is more important than your payment history. More credit cards = higher score.
Call your creditors and tell them you are buying a home and will need higher credit limits, that will buy you a number of "free points" on
your credit score.
I don't know how often the creditors actually report to the credit bureaus, over here it's only every 3-4 months. If it's the same
over there that means it will be 3-4 months until the increased credit limits affect your score.
I always advise people not to increase their credit usage and go in debt, but to divide your debt up into more accounts and that also increases your
score.
I drive therefore I am.
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sdh2903
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| posted on 3/11/15 at 10:43 PM |
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Firstly credit scores don't mean poo to a lender. They are just a gimmick sold by the credit reference agencies.
Under the new affordability regs they look at payment history. Overdrafts savings etc. If you can prove you can afford the mortgage with some wiggle
room for a rate increase then I wouldn't be fretting over the available credit although if it was below 50 percent it would look slightly
better.
We took our first mortgage out last year and we had to take a 95% mortgage which meant we are on a higher rate for 2 years but in the grand scheme of
things it was worth taking the hit as prices in this area have gone up around 7 percent on average in 12 months so we are still gaining.
Last thing I would massively reccomend is get a good independent mortgage broker. We paid 300 quid for ours and he was excellent with no hitches and
we got offered the advertised deal and we had a written offer in 10 days and completed on our house in just over 3 weeks. His experience and
knowledge was invaluable and worth every penny.
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Texan
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| posted on 3/11/15 at 10:53 PM |
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quote:
Originally posted by sdh2903
Firstly credit scores don't mean poo to a lender. They are just a gimmick sold by the credit reference agencies.
Wow! If that's true then that's great!!
Over here your credit score determines which loans you can have, what down payments, what interest rate and how carefully the underwriter looks at
your information.
As to credit scores being a gimmick, that's basically true. Credit scores here were developed so that the Credit Bureaus had a way to sell your
information to people without divulging any secret personal stuff. I'm betting yours are the same way. We probably bought your scoring methods
or you bought ours.
I drive therefore I am.
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sdh2903
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| posted on 3/11/15 at 11:03 PM |
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Over here credit reference agencies sell monthly monitoring access to improve your credit score etc etc. The banks don't say "you need a
score of 700 to get a loan" they concentrate more on what you've got. What your paying out and how you use your credit. Yes they
scrutinise your credit history supplied by one of the 3 big reference agencies but the actual score is bollocks.
The biggest "no no's" now I was advised are records of drawing out cash on credit cards and any record of using pay day loans.
These are hugely damaging to your chances of getting a mortgage.
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geoff shep
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| posted on 4/11/15 at 10:43 AM |
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Agree on using a broker unless you are very knowledgeable, very lucky or have a good deal with your existing bank.
I have used London and Country a number of times and they have been very helpful. They do not charge a fee - although clearly they must get something
from the lender. They have also come up trumps in the past for elderly in-laws.
http://www.lcplc.co.uk
PS: That was supposed to be a no obligation suggestion but I've just been on their site and they have a refer-a-friend offer. So if you try
them, and mention me, apparently I can get some M&S vouchers - aways need new pants!
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ravingfool
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| posted on 4/11/15 at 11:20 AM |
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I used a broker a couple of years ago and they were very helpful.
There was a period where it was relatively easy to deal with the mortgage providers direct but now it seems to be quite helpful to have a broker
however, the information about the rates available is quite freely available online these days so if you know what you're doing it's
certainly possible to go direct.
Do some reading over on moneysavingexpert and try out their mortgage calculators. They don't pick up every offer though, NatWest's best
rates don't seem to be on the comparison page so worth checking direct too.
If you go for a broker try and get some local recommendations and ignore recommendations from chain estate agents who are only recommending so that
they can get a kick back. Some friends of mine went with the recommended broker because they were pressured into it by the agents and the broker has
been a complete shower (like the agents).
As ever, the more money you have and earn the more the banks will lend you and the better the rates they will offer. But what really matters is a
history of paying what you've agreed to pay and having sufficient income coming in to be able to afford the mortgage repayments on top of
anything else you're already committed to.
It would obviously be a lot better if you could get rid of that credit card debt before you apply for your mortgage because the monthly payments on
any other debt are presumably going to be a lot more expensive than the mortgage debt and they reduce the amount that you could afford to pay monthly
on the mortgage.
MSE
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steve m
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| posted on 4/11/15 at 04:12 PM |
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My Son, and Daughter in law, had to move house a year plus ago, as it was rented, so looked at mortgages, with a view to buy
They could only muster about 100k between them based on Daughter in law =DIL wages as my Son, has never had a bank account, as originally got paid
cash, and the after that finished his pay went into "DIL" account
Son was advised to get a bank account, with overdraft facility and a loan, but to ensure he was in credit 99% of the time, and pay the loan off, which
he has
They have had a mortgage agreed for around 270k and are on the hunt for a place to live,
270k in Sussex, does not buy much at all !!
But by him having and using credit etc, even for only a year, has put him in a real good position, with the lenders
the fact that the loan for 3 grand was supposed to buy a car, but he actually bought 3k 's worth of fishing gear is immaterial
steve
Thats was probably spelt wrong, or had some grammer, that the "grammer police have to have a moan at
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