The i - The biggest mortgage mistakes people make – and how to avoid them
When you are about to make a dream purchase, you do not want an error to scupper things for you.
But one thing you do not want is an error in the months before you complete on that dream home, delaying your purchase and causing unnecessary stress and anxiety.
One of the most common mistakes is failing to get a decision in principle as this often results in borrowers viewing properties that they cannot afford. This can lead to disappointment when they later discover that their mortgage will not cover the price of the property they have set their heart on. Worse still, some buyers make offers without knowing their borrowing limits, leading to stressful renegotiations or even losing out on the property.
Aaron Strutt, product director at Trinity Financial, told The i: "Do not underestimate how much the lenders rely on credit reports. Missing a payment or two on a credit card or loan can be very costly. Keep an eye on your credit report and think twice about signing up for finance on smaller items.”
“We regularly speak to people with missed payments showing on their credit report for silly things like missed water bills or outstanding parking fines.
“If you get a string of missed payments on your credit report or a CCJ, this can be the difference between getting a mortgage with a high-street lending offering decent rates, and an adverse credit provider charging much more.”
Changing financial circumstances mid-application Linked to the above, is an issue brokers flag whereby someone changes their financial circumstances part-way through an application. This can include taking on new borrowing, changing jobs, or making large purchases that affect what they can afford.
Mr Strutt says that generally, taking out new credit after a mortgage application is started is a bad idea. “Taking out credit after a mortgage offer is issued is not a good idea. If you are declined for a credit card or loan or if the lender credit scores you again it may cause an issue. “If you buy a car or sign up to an ongoing monthly commitment for something like a sofa or bed that shows on your credit report, you mortgage may not be deemed unaffordable in the lender’s view.”
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