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Families looking to climb the housing ladder may benefit as lenders explore more imaginative ways to finance home purchases.
Last week Skipton Building Society announced the launch of the UK’s first 100% mortgage loan since 2008, and Leeds Building Society now uses subscription services such as Netflix and Spotify to allow applicants to Determining whether there is a possibility of repaying the loan.
Of course, there are many factors a lender considers when evaluating a mortgage application, such as income, employment status, overall affordability, etc. Lenders typically rely on Equifax, the UK’s three major credit reference agencies. , Experian, and/or TransUnion. When considering a mortgage application. But Leeds, her 13th largest building association in the UK, became the first financial institution to use data from Experian Boost, saying it should boost applicants’ credit scores by 7.5%.
Read more: Martin Lewis explains how much your monthly mortgage payments will increase after interest rates rise
A credit reference agency is an independent organization that securely stores data about you, such as credit applications, accounts, and financial behavior. However, Experian Boost works a little differently and separates your history of recurring payments over the past 12 months that are not normally recorded in your credit file, such as recurring card payments for services like Netflix, Spotify, and investments and savings like ISA. Collect. and a monthly savings account.
Commenting on the announcement, Richard Fearon, Chief Executive Officer of the Leeds Institute of Buildings, said: “This is especially true for young borrowers, first-time buyers and low-income earners who face the toughest challenges of proving their ability to repay. Often it’s not their fault, these groups struggle to build good credit scores because they need to spend most of their income on rent and other regular payments. In fact, the majority of existing Boost users are renters.
“Housing is at its most affordable stage since its inception in 1875, a sad accusation of decades of inertia in Britain’s housing crisis. , we will continue to look for ways to make it within our reach, for almost 150 years.”
To take advantage of today’s changes, you’ll need to sign up for Experian Boost. It’s free. For now, the boost will only help if you’re applying for a mortgage as a single applicant, but the building association says it plans to apply the boost to joint mortgage applications “in the near future.”
Youth homeownership rates have nearly halved since the 1980s as property prices have far outpaced wage growth, according to recent research. Others point to a serious shortage of new buildings and that many older people want to continue living in large family housing to leave an inheritance for their children.
“We have a generation that owns their own homes and have benefited from tremendous growth, and if we can get a mortgage, we can pay it off before we retire,” said Frank Young of the think tank Civitas. It’s becoming more and more fragmented with a generation that struggles to make ends meet.” It’s just a ladder.』
The Skipton Building Society last week announced a no down payment contract that does not require the assistance of a guarantor. Skipton’s 100% mortgage, aimed at renters struggling to save a down payment, is available only to first-time buyers who have paid their rent in full and on time for at least 12 months and is comparable or below. You can only borrow the amount of than monthly rent.
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Martin Lewis, founder of MoneySavingExpert.com, said, “Years of real estate porn TV shows have spurred the idea that we should buy the biggest house possible, as soon as possible. But the real priority is not to overwhelm the finances.” Before the financial crisis of 2007, banks simply threw home loans at people walking past their branch windows. I have to be more careful now. As such, the Skipton Building Society’s criteria for requiring good rental performance to prove someone can pay a mortgage are: It’s a smart thing to do, so I’d be cautious and welcome it to be an option for some, advised and prudent. “
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