Overcoming Credit Score Worries: A Chef's Guide to Hassle-Free Homeownership
Scott Austin • September 15, 2023
Lets get cooking on your credit score!
Are you a chef with a dream of owning your own home?
While your culinary skills are undoubtedly impressive, navigating the world of mortgages can seem like an entirely different recipe. One common concern that may be holding you back is your credit score. But fear not, as there are ways to address this issue and make homeownership a reality. In this blog, we'll explore how chefs can overcome credit score worries and secure a mortgage with ease.
Understanding the Credit Score Challenge
Credit scores are a critical factor that mortgage lenders consider when assessing your eligibility for a home loan. A low credit score can result from various factors, including outstanding debts, late payments, or limited credit history. There are 3 main credit agencies in the UK. Each will hold information on you, and some lenders have a preference as to which one they will use. In a moment I will explain how to get your own FREE comprehensive credit report. This will help you immensely in getting a handle on what your credit looks like and how it is viewed by lenders. As a chef, you might have faced periods of financial uncertainty and had to relied on credit cards during challenging times to keep your business afloat. Or take short term loans, all impacting your credit score.
The Importance of a Good Credit Score
A good credit score is essential when applying for a mortgage for several reasons:
- Interest Rates: A higher credit score often translates to lower interest rates on your mortgage. This can save you thousands of pounds over the life of your loan. A higher score will also open the door to many more lendrs willing to lend to you.
- Loan Approval: Lenders are more likely to approve your mortgage application if you have a strong credit history. This is very true, however there are now quite a few lenders in the market that will allow missed payments, but the trade-off is what i said above higher rates.
- Loan Terms: A good credit score can also result in more favorable loan terms, such as lower down payments and reduced mortgage insurance requirements.
Improving Your Credit Score
Now that you understand the significance of your credit score, let's explore how you can improve it:
- Review Your Credit Report: Obtain a copy of your credit report and check for any errors or discrepancies. Dispute and rectify any inaccuracies you find. Click for your free credit report from checkmyfile.com, the most comprehensive credit report available. This report will show the same information as what the lenders will be viewing. This is a #greathack for getting prepared before application thus increasing your chances of a successful application.
- Pay Down Debts: Reducing your outstanding debts is one of the most effective ways to boost your credit score. Create a repayment plan and stick to it.
- Pay Bills on Time: Consistently making on-time payments is crucial for your credit score. Set up reminders or automatic payments to ensure you don't miss any due dates. Setup all of your bills and payments on direct debit, this way your payment history will be perfect.
- Avoid New Credit: Applying for multiple credit cards or loans within a short period can negatively impact your credit score. Limit new credit inquiries during your homebuying journey. Wait to purchase all of thosse lovely things your planning until after the mortgage completes. This way you will not inadvertenly ruin your chances.
Working with a Mortgage Expert
While improving your credit score is essential, it's not the only solution to securing a mortgage hassle-free. Working with a mortgage expert like us, who specializes in helping chefs and self-employed individuals is invaluable. We understand the unique financial challenges you face and can connect you with lenders who offer tailored solutions to your circumstances. As an expert in self-employed mortgages for chefs and restaurant owners, and because I have many lenders to choose from, I can usually find a lender that matches your varying income. We have been doing this for years and know who to place you with to get the best outcome.
Conclusion
As a chef, owning your own home is within reach, even if you've had credit score worries in the past. By taking steps to improve your credit, staying on top of your financial responsibilities, and seeking guidance from us, you can navigate the mortgage process with confidence, knowing that you are armed with the right ingedients to get your approval first time. Your dream home or next mortgage may be closer than you think, and a brighter financial future awaits on the other side of homeownership.
I know that it is a balancing act, and that you are very busy, but getting your credit report from the link above is quicker than boiling an egg. So get yours and lets get house hunting!
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Getting onto the property ladder with ease.
So, here we are half way through 2021 and the property market is still going crazy, I heard a story the other day about a first time buyer that went to view a flat in London and there were 10 other couples waiting outside, now that might not seem like much but it might just put you off selling up and moving. So, if you are going to "stay put" then it is time to think about if you can get a better rate for your current mortgage. With rates at all time lows and not much indication that they are going up anytime soon, this is your opportunity to save money. So if you are on a fixed rate that is going to end in the next 6 months then now is the time to get in touch and see if a better rate is available to you. If you are on the standard variable rate or a tracker and you want to see if a fixed rate is now worth it because the rates are so low then we can help to. We can even help you stick with the same lender and get you a better rate than the standard variable, so if you need quick action we can help there too. Contact Zoom Mortgage telephone 0800310121 email contactus@zoommortgage.co.uk .
This story + many more are available in our 1st edition of the Zoom Mortgage and Property Magazine. Available for you for free here https://zoommortgage.lpages.co/zoom-mortgage-property-magazine THE CORONAVIRUS (COVID-19) pandemic led to the virtual disappearance of mortgages that only required a 5% deposit. But the Chancellor, Rishi Sunak, announced on 3 March a new initiative during his Budget 2021 speech. The government-backed mortgage guarantee scheme is open to first-time buyers and home movers across the UK and is aimed at encouraging banks and building societies to offer 95% loan-to-value (LTV) mortgages again. The announcement is tremendous news for first-time buyers looking to get on the property ladder at a time when, for many, owning a home may seem an impossible dream as they would otherwise not be able to find a large deposit to secure a mortgage deal. GETTING ON THE HOUSING LADDER The announcement aims to stimulate the housing market and get more people onto the housing ladder. The Chancellor said there was good evidence that ‘this will help those that are getting on the housing ladder disproportionately to other home movers.’ He said: ‘We know from the previous time we did it, it helped 100,000 people buy a home and the average value of a home bought under the scheme was £160,000, compared to the average price of a home which at that time was more like £225,000. ‘And 80% were first-time buyers, so it feels like it is a policy that is quite well targeted to help people get on the housing ladder.’ ACROSS THE UK The government introduced the scheme for new mortgage applications which commenced from April and provides a guarantee to lenders across the UK that offer mortgages to people with a deposit of five per cent on homes with a value of up to £600,000. This scheme is for any ‘creditworthy’ household struggling to save for a higher deposit. These will be standard residential mortgages – so no second homes or buy-to- lets. If the borrower gets into financial difficulty and their property is repossessed, the government will cover that element of the lender’s losses. The scheme opened for new mortgage applications from April and will be open to new applications until December 2022. Several of the country’s largest lenders, including Lloyds, NatWest, Santander, Barclays and HSBC, are offering these 95% mortgages, with others to follow shortly after. The mortgages must be on a repayment basis, not interest-only. And borrowers will need to be credit checked and meet the standard rules on affordability. All lenders under the scheme will also offer mortgages fixed for at least five years, providing options for buyers with smaller deposits who want the security and predictability of a mortgage with a fixed rate over a longer term. Eligible mortgages guaranteed under the scheme will need to: • be a residential mortgage (not second homes) and not buy-to-let • be taken out by an individual or individuals rather than an incorporated company • be on a property in the UK with purchase value of £600,000 or less • have a loan-to-value (LTV) of between 91% and 95% of the value of the property • be originated between the dates specified by the scheme • be a repayment mortgage and not interest-only • meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage, for example, a loan-to- income and credit score test LIFELINE FOR FIRST-TIME BUYERS Thanks to soaring house prices and tighter rules on mortgage approvals, the first rung of that famous property ladder can be very hard to reach. So the new government backed mortgage guarantee scheme will be a lifeline for those first-time buyers trying to get on the housing ladder. >> GET AN ESTIMATE ON HOW MUCH YOU COULD BORROW << Are you ready to buy a property? You’ve dreamed of owning a home for as long as you can remember, or maybe you’re looking to move to another property. Now the new government-backed mortgage guarantee scheme could make it a reality. To discuss your options and get an estimate on how much you can borrow, contact Zoom Mortgage – telephone 0800310121 – email contactus@ zoommortgage.co.uk
This story + many more are available in our 1st edition of the Zoom Mortgage and Property Magazine. Available for you for free here HOW MUCH DOES IT COST TO BUY A HOME? “The total cost of buying a property is often underestimated. It’s not just finding a deposit.” IF YOU’RE THINKING of buying a home, there’s a lot more to consider than just the price of the property. While you might be aware of the major costs involved in buying a house, there could be extras you haven’t considered. The total cost of buying a property is often underestimated. It’s not just finding a deposit. Among the additional costs that need to be covered are legal fees, surveyor’s fees, stamp duty and moving costs. Preparation is particularly important if you are a first-time buyer. HOW MUCH IS A PROPERTY IN THE UK?[1] EXAMPLES OF DEPOSIT AMOUNTS BASED ON AVERAGE HOME PRICES IN THE UK • In England, the average home costs £246,000 5% DEPOSIT £12,300 • In Scotland, the average home costs £151,000 5% DEPOSIT £7,550 • In Wales, the average home costs £164,000 5% DEPOSIT £8,200 • In Northern Ireland, the average home costs £140,000 5% DEPOSIT £7,000 Source: Office for National Statistics, February 2020 Of course, there’s a lot of variance in price depending on the type of property and the location. Zoom Mortgage offers 100 + 95% mortgages from many different lenders. HOW MUCH DEPOSIT IS REQUIRED? Usually, when you buy a home, you’ll pay 5%–20% of the total price as a deposit and take out a mortgage to cover the remaining cost, which you’ll repay over an agreed period of years. If you don’t have this much deposit then there are ways to buy a home with a smaller deposit or no deposit, such as a guarantor mortgage or the Shared Ownership scheme. WHAT ARE THE OTHER COSTS INVOLVED IN BUYING A HOME? MORTGAGE FEES Different mortgage providers charge different fees, and different amounts for those fees. Some of the common ones include: • Arrangement fee – up to £2,000 usually is £999 for many products • Booking fee – up to £250 • Valuation fee – up to £1,500 • CHAPS transaction fee – up to £50 • Account fee – up to £300 • Mortgage Broker fee - This depends on the broker used. At Zoom Mortgage we charge a fee of 0-£1500. Usually this fee is a flat £499 but the cost is based on the complexity of the work to be undertaken on the clients behalf. You might have the option to add these fees onto the loan amount so that you don’t need to pay upfront – but this will mean you’ll also be charged interest on them. This is not usually advisable to do because of the additional interest payable. STAMP DUTY Stamp duty is a tax paid on property in England and Northern Ireland. There are similar taxes payable in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax). Fortunately, under the current rates there is no stamp duty to pay on property up to the value of £300,000. Above this amount, stamp duty is calculated as a percentage of the property price (between 3% and 12%, depending on the total value). This is a reduced rate, due to the coronavirus pandemic. SURVEY COSTS It’s crucial to have your property examined by a surveyor before completing the purchase, as this can identify many kinds of expensive issues that might arise in the future. There are various types of survey, with different costs, these are all estimated costs including: • A basic condition report (£300+) • A more detailed homebuyer report (£400+) • An in-depth building survey (£450+) • A full structural survey (£600+) SOLICITOR’S FEES Another essential cost is a solicitor, to draw up your contract and help to complete your sale. You should expect to pay between £800 and £1,600. This includes your *legal fees, *money transfer fees, *land registry fees and searches. CONVEYANCING IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY. >> SIGNIFICANT FINANCIAL COMMITMENT << Buying your home is not only exciting but for many can be one of the most stressful times they’ll ever experience, not to mention a significant financial commitment. From your mortgage deposit to fees and other costs, buying a property is an expensive business. To discuss your situation or for further information, please contact Zoom Mortgage – telephone 08003101210 – email Contactus@zoommortgage.co.uk. Source data: [1] https://www.ons.gov.uk/ economy/inflationandpriceindices/bulletins/ housepriceindex/february2020
