According to the latest figures from Aldermore, 2021 was a difficult year for many first-time-buyers as they saw their mortgage applications rejected by banks and building societies. In fact, 75% of first-time-buyers saw their application rejected last year compared to 62% in 2020.
There are several reasons this is happening and the most common reasons for an unsuccessful mortgage application was poor credit history, bank errors, not having a large enough deposit, having other debts such as payday loans, not having enough payslips or being self-employed and having a high level of debt. Many of those surveyed blamed the pandemic for these issues with over half of those taking part stating that they had experienced disruption to their employment and at some point, had been furloughed.
However, it’s not all doom and gloom as 2022 looks set to be a much more positive year for those looking to get onto the property ladder. With the end of furlough, many people are back in full employment and after a long period of being unable to go out, shop or go on holiday, potential buyers have managed to save a larger deposit to put down on a property.
One of the most important things you can do to improve your chances of buying a home is to ensure you have a good credit score. Here are some of the most effective ways to do this:
Register on the electoral roll at your current address to prove where you live.
Build your credit history – make debt repayments on time and if possible, in full. If you do this each month lenders will see you as a reliable borrower.
Keep your borrowing as low as possible – this doesn’t mean that you shouldn’t have credit cards but that you should keep the balance as low as possible. Try to keep the amount of borrowing down to 30% or less of the available limit. Consider also a credit builder card which can help to improve your score.
Check your credit report for any errors or associations that aren’t correct and have these removed. If you spot a mistake, you can either go to the provider to correct the information or you can go via the credit agency who can raise a dispute on your behalf.
Try to keep accounts for long periods of time rather than closing and opening accounts for incentives – the longer you have held accounts, the better for your score.
Try not to move home too often – the longer you stay at any given address, the better.
The good news is that this year looks set to be much easier for first-time-buyers as mortgage affordability rules will be relaxed. Mortgage lending should reach record highs this year on the back of high levels of housing market activity caused by the pandemic-induced search for space.
Last year Zoopla saw the busiest property market for 14 years.
Clyde Property is a leading independent, multiple award-winning estate and letting agent with more than 30 years’ experience in selling and letting property in Scotland. Just call your local Clyde Property branch today for friendly, impartial advice on finding your next dream home.
