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Top 5 Mortgage Hurdles You May Come Across in Cardiff

Specialist Mortgage Advice in Cardiff

There’s a high chance that you could encounter difficulties during your mortgage application. This could be anything from failing to match lending criteria to your application being affected due to a divorce/separation.

Mortgages are complicated! You won’t be able to obtain one just like that. Firstly, you’ll have to pass lender credit checks and affordability assessments to show that you’re eligible for a mortgage. If you encounter a hurdle during these stages, you may need a mortgage specialist to help progress your application. If you are a First Time Buyer in Cardiff, these problems may seem complex; we can explain these problems and will try to help you get by them.

Here is a list of the most common mortgage hurdles that home buyers come across during their mortgage process.

Common mortgages hurdles

Childcare fees

It’s very unlikely for you to be turned away due to you having children, however, your overall offer may be a little higher than if you didn’t have them.

When assessing your affordability, lenders will factor childcare costs into your expenditures. They have to be sure that you can afford a mortgage, therefore, they have to consider all of your outgoings. Childcare costs (depending on how many children you have) can run into the hundreds each month, and they don’t go down! They’ll treat these costs as recurring payments and will treat them as they would treat a car loan or hire purchase agent.

Even if you don’t pay for childcare, such as a nursery, you still may be offered less than other buyers who don’t have children.

Divorce/separation

It’s unfortunate when it happens, but when you and your partner decide to call it a day and you’re both linked to a mortgage, you may need to solve your financial problems first. Things can get complicated the longer that you leave it.

Lenders may struggle to progress your application if you’re still financially linked to someone else, especially you’re linked through a mortgage. This would mean that you would be accountable for two sets of mortgage payments each month, which could be too much for you to manage.

When customers in this situation come to us for Specialist Mortgage Advice in Cardiff, we are usually asked the same type of questions:

  • How can I remove my ex’s name from my mortgage?
  • How do I remove my name from my ex’s mortgage?
  • Can I have two mortgages?

If you are asking these questions, it may be best to try and speak with a professional advisor who may be able to assist you with these problems. A situation like this is already stressful enough, never mind the worries of your mortgage.

Benefit income

Different lenders will have different views on benefit income and will assess it differently. Other benefits that could be assessed include child tax credit, working tax credit, disability benefit or pension. Each lender will differ with what they choose to assess.

We have access to many different specialist lenders that each have their own unique lending criteria and will measure different types of income. These types of lenders could help you with your case.

New job

When you get a new job, more often than not, it will come with a higher salary. This would mean that you have more money for things like a new mortgage. You would also think that because of your new higher salary, you should be able to get a mortgage easier, however, this is sometimes not the case.

Some lenders may consider probationary periods as an issue (depending on the likelihood of you staying on), whereas others may not be bothered at all. They will also look at your previous line of work and see whether you were employed for a while before your new job or if you were jumping in and out of work. Lenders need to make sure that you are a reliable applicant and not someone who will be unemployed within months. Gaps in employment can negatively impact your chances of being accepted.

On the other hand, some lenders may even qualify you before you’ve even started the job. This will be no more than a month in advance.

Evidencing a deposit for a mortgage in Cardiff

In Cardiff, when you’re applying for a mortgage, you need to correctly evidence your deposit and show exactly where you obtained it from. If you’ve simply built it up over time, you will need to evidence this through your bank statements and if you’ve received a gifted deposit, the person gifting you the money will have to prove where they have got the money from.

This is all for anti-money laundering purposes and so that your lender knows that the funds have been legally raised. Your solicitor and estate agent may also ask for this evidence.

Applicants can easily slip up on this part of their mortgage application. If your funds have not been evidenced correctly, your lender could start to question where the money has actually come from. If you use a Mortgage Broker in Cardiff like us, we will help you evidence your deposit correctly. We can go through this step with you so that you have the best chance of being accepted by your lender.

Renting vs Buying in Cardiff: The Benefits & Drawbacks

Should I buy a property or stay renting? | MoneymanTV

Why should I consider buying a property?

If you are only planning on living for a short period, renting makes more sense. However, if you are going to stay in a particular area for a long time, saving for a deposit and buying would be more suitable.

If you had parent(s) who took out a mortgage, this might encourage you to be a first time buyer in Cardiff once you saved enough for a deposit. This article will take a look at the benefits and drawbacks of buying a home.

First time buyer mortgage advice in Cardiff

The property market fluctuates, leaving people unsure whether when is the best time to start putting your foot onto the property ladder. Before committing to a purchase, you should speak with a mortgage advisor in Cardiff to discuss all your options.

With that said, this is more than just an investment. It’s a home. The most important factor is finding the most suitable one for your circumstances.

Will a mortgage be cheaper than renting?

More often than not, your repayments on the mortgage can sometimes be cheaper than rent. Interest rates tend to fluctuate, too, meaning your mortgage payments can do the same. Alternately, you could look a taking out a fixed-rate mortgage.

A fixed-rate mortgage will ensure your payments remain the same for a set period. On the flip side, rental properties typically see prices stay the same or increase.

Security

Owning a home creates a sense of stability for them and their families. Providing you can keep up your payments, nobody can force you to leave your home if you don’t want to.

As a tenant, you get some protection with things like how much notice you need to be given, and if they want the house back, your hands are firmly tied. However, when you factor in family, work or schools nearby, this isn’t ideal for you.

At times, Landlords give their tenants the first refusal to buy the property if they are selling, as this saves them on Estate Agent fees.

Flexibility

Renting can be a more flexible option than owning a property. There’s nothing to stop you from giving your landlord notice if you want to leave for a job in a different area.

As a homeowner, this becomes awkward as you have to decide whether or not they want to rent out your home or sell it. The process of selling a home and buying a new one is both expensive and time-consuming.

If you’re unsure of your commitment to a set area and feel you may move again, you should consider whether or not it’s worth buying a property. It should be viewed as a long term investment.

Repairs

Landlords should be responsible for all major repairs that a tenant needs. Some are better than others when it comes to this, and you still might end up doing some repairs yourself.

If you are a homeowner, then all of this is down to you, ensuring the property (a condition of any mortgage you take out).

Contrary to popular belief, owning your own home is not for everyone. If you are young and moving in with a partner for the first time, renting may very well be the perfect option for you.

There’s nothing wrong with renting for a while. However, life is unpredictable, and for one reason or another, you may need to remove someone’s name from a property, which can be difficult on a mortgage.

There are not many more extensive financial commitments than buying a home, so everyone should consider the options before diving in. If you decide to rent through, it may take you much longer to save up for a deposit.

Overall, most folks tend to decide on buying over renting. However, no matter whether you’re paying rent to a landlord or paying for a mortgage, you’re still making monthly payments to live somewhere.

The consensus is that people would much rather their payments go towards their benefit than someone else. It’s often just a matter of timing and being in a better financial position.

Getting on the property ladder 

Home movers in Cardiff are often in two minds whether to move or not (e.g. “I like my neighbours, but I’d like an extra bedroom). However, most potential first time buyers in Cardiff, if asked, would likely say they want to be on the property ladder.

They are often unphased by and disinterested in external factors such as ongoing political events. So whilst the housing market does go through fluctuations, this hardly ever puts people off wanting to get onto the property ladder. 

It should always be classed as a long-term investment, and whilst it might not be ideal if your home drops in value, history suggests that when that does occur, the prices go back up in the long run.

Small deposit mortgages

95% mortgages are an option if you fit the criteria, if you are more than halfway to having the 5% deposit available, it’s worth trying to get an Agreement in Principle in place. To make sure you are eligible for a mortgage when the time comes.

How Much Deposit Do I Need To Buy A House in Cardiff?

Mortgage Advice in Cardiff

How much deposit you need to buy a property depends on your personal situation and what it is exactly what you are looking to do. Here we take a look at how much you might need based on your own circumstances.

Why do I need a deposit anyway?

In previous years, 100% mortgages were readily available and before they were taken away, Northern Rock was offering 125% loan to value mortgages. What this meant is that if you were buying a property valued at £100,000 they would lend you up to £125,000.

Lenders require you to put down a deposit simply to reduce their risk of lending. If they lend you 100% of the purchase price then you happen to accrue any debts leading to property repossession, then they could be at a financial loss, especially if the house prices dip and they can’t make their money back.

You will also find that some say if you haven’t invested some of yours or your family’s money into your home, then you might find it a bit too easy to “walk away” should the going get tough and you were finding it difficult to meet your monthly payments. If you are not in a position to save up at least 5% of the purchase price yourself, then it could be argued that you’re not quite ready to take that first step onto the property ladder.

Won’t the government pay the deposit for me?

Unfortunately no, but if you are able to find 5% of your own resources then you could qualify for the government’s Help to Buy equity loan scheme. This applies to new properties only. You put in 5% and the Government loans you up to 20% to make up a 25% deposit. After 5 years you need to start looking at paying the equity loan back possibly by way of a remortgage or from any kind of savings you have been able to make in the meantime.

Is a 5% deposit enough?

At the moment, yes 5% is enough in many circumstances. Not all Lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify. There are lenders out there that would consider you for a 95% mortgage with an average credit score but the interest rates are usually higher in those cases.

My credit history is poor – how much do I need to put down?

A majority of the specialist lenders want you to put down at least 15% deposit if you have a history of poor credit once again as above this is simply to reduce their risk in case a repossession becomes necessary. It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not completely impossible to find one.

What about Buy to Let?

You’ve always needed to put down a much larger deposit for Buy to Let Mortgages and most lenders at the moment are looking for at least 25%.

Can I take out a loan for the deposit?

This could be possible but the vast majority of lenders won’t allow this as it would more or less still be 100% lending.

Can someone gift me a deposit?

Yes, this happens all the time. Usually, it’s “bank of Mum and Dad” gifting or other family members but lenders have been known to accept family friends for gifting the money, so long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift as some kind of loan.

Are there any circumstances where I don’t need a deposit?

If you are buying as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the Right to Buy scheme then generally speaking you wouldn’t need to put any of your own money in as the equity is already “built-in” to the deal.

Please remember that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

How to Improve Your Credit Score in Cardiff

The importance of credit score

Ways to improve your credit score | moneymanTV

First Time Buyers or any applicants with high credit scores are more likely to get accepted for a mortgage over applicants with a lower credit score. Lenders study your application carefully in order to ensure that you are able to afford a mortgage with them. You will never be guaranteed a mortgage and this is because every lender has different lending criteria and the chances of you matching every single one of these is unlikely.

Each lender has developed their own way of identifying whether you match their criteria or not. It is your Mortgage Advisors’ job to try and find you a lender who has the most criteria you match up to. They will also try to find the best deal for your personal circumstances. Whether your advisor is from your bank, the mortgage lender or a Mortgage Broker in Cardiff, your advisor will try their best to match your personal circumstances.

By going with a Mortgage Advisor in Cardiff, you will always know what is going on and will always be updated if anything changes or something comes up. We are a dedicated mortgage broker, here to help improve your credit score and help secure that perfect mortgage deal. Whether you are a First Time BuyerMoving Home or Self Employed, we think that you would benefit from fantastic Mortgage Advice in Cardiff.

Credit Score Mortgage Advisor in Cardiff

There are many different credit reference agencies in Cardiff that you can go to, with the most popular are Experian and Equifax. Before you make a decision, research each agency as it is a possibility that some of them could be holding incorrect data and discovering any discrepancies will be very beneficial to you.

Improving your credit score can be difficult but there are ways you can do this effectively in a manner that allows you to reap the rewards down the line.

Avoid unnecessary credit searches:

Making multiple credit searches could actually have a adverse impact on your credit score. Price comparison websites are risky as they can also damage your score, so be extra careful. We also advise you to not apply for credit during the mortgage process as this may signify to the lender that you are struggling financially, even if you are not. It is a good thing in the long term though as it shows that you are reliable in making recurring payments.

Check that you are on the voters roll:

Another simple but useful tip for improving your credit score is by registering for the Electoral Roll. In the eyes of the lender, it shows stability which they will favour. When registering, you must spell your name correctly and set your address to your current one and not a previous one. If you are not registered then you definitely should do this asap, as it’s quick and easy to set up and it could have a really positive impact on your credit score. Make sure everything is correct though to maximise the benefits!

Don’t run close to your maximum limit:

Maxing out your card each month is not recommended and is bound to reduce your credit score. The lender looks at your credit card statements to check whether or not you have paid off balances by the due date. If you are meeting due dates and have never exceeded overdraft limits then a lender will see that you are more than capable of handling your finances well and it could prove beneficial towards your mortgage application.

On the flip side, if you don’t manage your finances carefully then the lender will believe that you don’t take payments seriously, thus reducing your chances of being accepted by them for any amount.

Check your address history is keyed correctly:

We often find that people who have moved house have not told their previous credit provider, which means that on their records you still are shown as living in the other property. Make sure you are on top of this as lenders don’t like to see your address history all mixed up and shown as living in two different places when you are not.

Remove financial links to others:

Some people, without even realising, have a family member or ex-partner connected to their financial commitments. It’s worth checking just to be sure, as you can’t get the financial association removed if the account is still live. If you are trying to remove any of these links then you should contact the credit reference agencies and make a request with them directly.

Applicants see credit scoring as being an unfair approach to accessing whether or not they can obtain a mortgage. Lenders disagree as this method provides a faster, fresher approach to their system of credit scoring. It’s also a lot cheaper for the mortgage lender and it provides always provides a result that they deem trustworthy.

If you want to get ahead of the game, you should send an up-to-date copy of your credit report in advance to your Mortgage Advisor in Cardiff. Starting early will increase your chances of being accepted for a mortgage the first time. The more that your advisor knows about your financial situation the better your chances will be.

Also, there are still some lenders that will want to do the process the old-fashioned way and will prefer a manual approach. They will have certain rules that they stick by about the number of defaults and CCJs that they will allow.

Cardiffmoneyman.com & Cardiffmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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