Friday, 18 March 2016 07:51

The Mortgage Credit Directive will soon be in effect

 The Mortgage Credit Directive will soon be in effect

 As of 21st March 2016, the new EU Mortgage Credit Directive will come into effect and this is also likely to impact on the mortgage sector as the application process will become tougher. The industry is being asked to carry out tougher tests with respect to affordability and income, and this has seen many of the leading mortgage lenders increase training for staff members in recent months to meet the new requirements when they come into effect this year.

Another factor in the mortgage industry in the past year has been the fact that mortgages have fallen to record levels. This is linked to the Bank of England base rate of interest, which has been historically low. If you want to have a look at some of the great mortgage rates presently in the market have a look at


Top 5 benefits to using an Independent mortgage advisor

When it comes to obtaining guidance and information about a mortgage, it is best to turn to a mortgage advisor. This leaves you with a choice, do you opt for the support of an independent mortgage advisor or do you call on the services of a mortgage advisor affiliated with a company or organisation.

Here are 5 benefits to using an independent mortgage advisor:


An independent mortgage advisor is on your side

One of the strongest reasons you will have for choosing an independent mortgage advisor is that they will look for the best mortgage for your needs. They are not affiliated to any lender, and this means that they have a wider range of mortgage products to choose from. When it comes to benefitting from the confidence that comes with unbiased advice, many people feel a lot happier turning to an independent mortgage advisor than a mortgage advisor who is linked to a certain lender.


Independent mortgage advisors have to work harder for recognition

While some people think that there is comfort in calling on the services of a leading bank or lender with a great reputation, this doesn’t always guarantee a high standard of service. An independent advisor knows that their reputation is vital to their career, so they are more likely to offer a higher standard of service each time.


An independent mortgage advisor is more likely to be hands on with your needs

When you call on the services of a mortgage advisor from a large organisation, they may have an extensive workload. This means that they may not be able to provide you with a focused level of service or it may mean that they utilise automated services for some aspects of the workload, in order to alleviate some of the pressure they face in their daily work.


By opting for an independent mortgage advisor, you are far more likely to receive a bespoke and tailored level of service that suits you and your circumstances.


Independent mortgage advisors carry out industry research


When you are looking for the best advice, it is important to call on an advisor that stays up to date with industry information and regulations. An advisor from a major firm may only keep in touch with news that is relevant to their industry or which has been passed down through the organisation. An independent mortgage advisor is more likely to undertake their own research and to be aware of a wider range of industry rules, regulations and changes.


An independent mortgage advisor offers more than just mortgage advice


You’ll find that a mortgage advisor doesn’t just provide you with mortgage information; they will offer guidance and advice on issues like:


·Life insurance


·Payment protection plans


·Contents or building insurance


These can be very important aspects when it comes to arranging your finances and arranging a mortgage. This means it is best to receive the best guidance and this comes from an independent expert. An independent advisor will provide you with the information you need to ensure that your new mortgage plans are covered in the event of redundancy, critical illness or even death.




Why it is important to get your finances agreed in principle prior to buying or selling


Given that there are so many components and elements to take care of when it comes to buying or selling a home, you may be confused over exactly what you need. While some professionals and experts will say one thing, other people may say something different and it is easy to see why so many people engaging with the property market are left frustrated and confused. However, no matter what you are doing in the property market, be it buying or selling, it is always important that you get your finances agreed in principle.


An agreement in principle comes with a lender taking basic details from you and then undertakinga credit search to generate a credit score and they then provide a figure that they would be happy to lend “in principle”. This is important information for a borrower because they need to know what their budget is and they need to know that they will be able to meet the requirements of the lender. Given the importance of this information to the buyer, it is easy to see that this information is equally important to the seller of the property. It is also fair to say that the estate agent working on behalf of parties will be pleased to see that a prospective buyer is in line to secure the mortgage.


Agreements in principle are not always fulfilled


However, it should be borne in mind that an agreement in principle doesn’t guarantee that a mortgage will be provided or the size of the mortgage that will be offered. A lender will look at a full mortgage application in greater detail and in conjunction with information contained in other documents provided; it may be that they come to a different conclusion from the one that was reached in the initial agreement.


Buyers also need to be aware that a positive rate of interest from a lender may not be so attractive or even available after a few months when they have finally found the property they want to buy. Another thing for potential buyers to be aware of is that if they have a number of checks carried out by different lenders, they could leave a visible footprint mark on their credit file. If there are too many credit checks on a file, this can harm your credit rating, which means by the time you apply for a mortgage, your credit rating isn’t as strong as it was when an agreement was reached in principle. This means buyers need to be aware as to how many lenders they consult with in their attempts to find the best mortgage.


This means that there are negative aspects and elements to arranging finances in principle but the benefits definitely outweigh the negative aspects. There is also the fact that some lenders, some estate agents and even some sellers will not proceed with negotiations until finance has been agreed in principle, which means that many buyers will have no option but to arrange their finances in advance of buying a property.




How to check your credit report first before you apply for a mortgage


Given the importance of your credit report and credit rating in applying for a mortgage, it makes sense to check your credit report before you apply for a mortgage. The credit rating will not provide you with everything that is taken into consideration by a mortgage lender, but it can give you a very good idea about the general state of your credit report, and what the likely outcome of a mortgage application is going to be. There is also the fact that your credit report may be inaccurate, so checking it in advance of applying for a mortgage will give you a chance to rectify these issues before applying for a mortgage.


In the United Kingdom, three companies compile data and information relating to the way people manage credit and make payments. These companies are:








Information contained in your credit report will include a list of all of your credit accounts which can include bank accounts, credit cards, loans, credit arrangements with utility providers and any other form of credit agreement you may have. The credit report will indicate whether you have made the payments on time and in full and if you have missed payments or made a late payment, this information will remain on your record for a minimum of 6 years. Information such as court judgments issued for non-payment of debts, bankruptcy or IVAs will also be included.


You’ll also find that your credit report will include details of people who you taken joint credit with, whether you are listed on the electoral register, your full name, your date of birth, your current address and previous addresses.


Make sure that information contained in your credit report is correct


This is a lot of information and as stated, there is scope for some of the information to be incorrect. Incorrect information could prevent you from obtaining the finance you need so it is essential that you rectify any errors or oversights in your credit report.


The three companies listed above are all required to provide you with a copy of your credit report for a small fee, and this can be obtained online or as a physical copy. This report is a snapshot of your credit history at the time of request. There are also free options for UK residents looking to check their credit rating.


Noddle, which is a brand name of Callcredit and ClearScore, which utilises Equifax data, allows free access to a credit report, and this is available for life. If you are looking to check your credit rating, signing up with either of these companies will provide you with the information you need without having to pay any money for the service.


It should be noted that all three credit reference agencies may hold slightly different information about you, and some people or experts recommend obtaining a credit report from more than one lender. With the current set-up, you could obtain the Callcredit report from Noddle, the Equifax report from ClearScore and the Experian report from Experian directly and only have to pay for the latter report. If you want to be as fully informed as possible, this is the advised approach to obtaining your credit report before applying for a mortgage.


However, you should be aware that leaving a lot of “footprints” on your credit score could impact on your ability to obtain credit. This is due to the fact that a high volume of searches may indicate that you are struggling financially or facing difficulty in obtaining credit.






Be prepared - Your pre mortgage appointment checklist


When you are going for a mortgage appointment, it is only natural that you will feel nervous. This is a meeting that could determine your future, but it is important that you make the process as simple and as straightforward as you can.


You will be required to bring a number of documents and information with you to a pre mortgage appointment and your lender/advisor should provide you with this information. However, if you are yet to receive this information or you have mislaid it, the following information will be useful. The following documents are the standard requirements for this type of meeting, so make sure that you have these documents and that you prepare them to take with you.


Proof of income and 3 months’ worth of bank statements


You should look to bring along your three most recent payslips and your annual P60 document. Anyone who is paid based on a commission basis or who works a lot of overtime is recommended to bring their P60 document for the past three years.


Anyone who is self-employed or is an owner or director of a Ltd company should bring along three years of company accounts or tax overviews.


Expenditure and credit commitments


You should look to bring along at least three months consecutive bank statements and these must be in full. These statements should contain your day to day expenditure, spending on bills, household income and all payments to credit providers, mortgages or on rent. The bank statement must clearly show the name of the bank, the name(s) of the account holder, the account number, the sort code and relevant dates for all entries.


You should also look to complete an income, expenditure and credit form which details all of the incomings and outgoings for your household. The information contained in this form should match the information contained with your bank statement.


Existing mortgage, savings and insurancepolicy details


You should bring along all statements and policies that you have in place. If you have bank or building society statements with respect to ISAs, you should look to bring along your three most recent statements. You should look to bring along your most recent mortgage statement and if the mortgage is scheduled to extend beyond the age of retirement, it will be of benefit to bring along any pension plan statements you have.


Proof of identity and current address


You will be asked to verify your current address so identification is required. A passport or driving licence are the standard forms of identity. With respect to verifying the address, a recent utility bill stating your name and address is the preferred document. It is important to note that bills older than 2 months may be refused. It is also important to note that the same document cannot be used to prove your identity and your address, so if you use your driving licence to prove your identity, you need a separate document to verify your address.



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