Saturday 31st of July 2021

Private Finance: Getting mortgage ready

If you are planning a move, getting your personal admin mortgage ready is crucial for looking good for prospective lenders, writes Jamie Rigby.

According to Rightmove, demand for Cotswold property is surging ahead of most other areas. The online property portal reports that the number of sales being agreed by agents in the Cotswolds outperformed the South West – as a whole.

Market Update

Looking at the UK, early data from HMRC shows that 190,980 sales went through in March 2021 – pretty much double that of March 2020, and a whopping 32% more than in February. The jump in March is likely to be because of buyers who managed to get their ducks in a row for the stamp duty deadline, even though it was then extended to the end of June.

Whilst the Cotswolds is leading the charge, other sought-after areas are also in high demand. Rightmove also found the average time to agree a sale last month was 45 days, the lowest figure registered in over a year.

So, what happens when the stamp duty holiday comes to an end? Property Armageddon? Unlikely. Savills, who earlier this year predicted that house prices would remain flat for the remainder of the year, estimate that prices will actually rise by 4% in the rest of 2021.

We believe that this estimation is probably underwritten by the current imbalance of supply and demand for quality property stock, in conjunction with the continuation of historically low mortgage rates available.

Getting ahead of the game

If you are planning a move, but the thought of a potential fight for viewing that dream property, best and final offers and nothing suitable appearing on property search engines seems all too daunting – turn the situation around to your advantage.

If you really don’t fancy the hot competition that’s prevalent in the market at the moment, concentrate on making your home as saleable as possible. Buying agents will tell you that it can take as little as 30 seconds for their clients to form an opinion on a property – positive or otherwise.

During the pandemic, bathroom paint was the most ‘googled’ paint, followed by kitchen. Homeowners seized the opportunity to improve tired walls or transform rooms.

Rated People, the online trades search facility, carried out a survey recently of 500,000 homeowners. 38% of those surveyed are planning improvements to the design of their home this year. To us, this suggests that there will be more properties on the market that are ‘oven ready’ and buyers may wish to see properties in good condition.

Mortgage Ready

Even if you could finance your next move from liquid assets, with mortgage rates as low as they currently are, it may make more sense to obtain a mortgage. In any circumstance, the importance of getting ‘mortgage ready’ can never be underestimated.

If you’re unsure of your credit score, it may be wise to use a credit search agency such as Experian or Equifax to see what lies beneath. Some of our clients could have sworn that they never used that Gold Card but, alas, two house moves ago they mistakenly used it to fill up the car once and the direct debit was set up incorrectly.

One failed mortgage agreement in principle and one Experian credit search later revealed the card balance had never been settled and a default had been registered. It may be fine – but its always worth checking to make sure there are no unknown problems or to simply make sure you have a good score. If any information on your credit file is wrong, you may be able to correct it before a potential lender spots it.

Making sure that those credit card balances are paid off, store cards are not utilised and that personal loan that you took out and have been meaning to repay early is actually closed off are all very good preparations to make sure that you look good to all prospective lenders.

Other personal administration can be key:

1. Tidy up those old bank accounts that you hardly use. If you have a bank account that you simply do not use, close it.

2. Make sure as many financial obligations such as credit cards etc are paid by direct debit. A missed payment on a credit card could count against you.

3. Where possible, don’t change the motor just before approaching a mortgage lender. Applying for car finance shortly before applying for a mortgage may impact your mortgage.

4. Make sure you know where all of your personal paperwork is, such as driving licence, bank statements, income documents. You will need these.

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