How do I ensure the best first mortgage possible?

n.b. I am in England.

I'm twenty one and looking to buy my first house in the next few years.

1. How can I ensure that lenders will be interested in giving me a mortgage of up to £140,000?

2. How can I ensure that I get the best interest rate possible?

I assume both answers are credit related. I have no credit history so have got a credit card from my bank and intend to buy my shopping with 1/3 of the limit each month and repaying it in full so that I never carry a balance. Perhaps in eight or nine months should I get another credit card and, say, pay all of my utility bills with it and pay off the balance? This way when I come to ask for a mortgage in three years time I will have had two, three or maybe more lines of credit on which I have never carried a balance and reliably paid in full every month.

Is this the best thing I can do? Is there anything else?

I am responsible and have enough savings to ensure that I would not run up a load of credit card balances.

2 Answers

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  • 1 decade ago
    Favorite Answer

    Your plan isn't bad, but... get 4 or 5 credit cards right away. Start using them all for regular everyday expenses and bills. Use the ones with the lowest credit limits for the smallest expenses. Pay them all off each month. This establishes a longer solid credit history. The other thing it does is give you a longer credit ratio. This is a very important thing. Creditor scoring modules look at the amount of credit each line has and the percentage of it you typically use, as a very high criteria when setting your credit score. After 1 year of usage, ask the credit cards for a 1 or 2 thousand dollar increase in your limit. This will make your ratios even better. 1/3 of limit is pressing it. 20% or less is optimal for the best scoring.

    Obviously pay each bill off at least a week before it's due. Preferably with online bill pay, so nothing ever gets lost in the mail. Make sure the payment is set to arrive at the creditor at least 2 full days prior to the bill pay date. This gives them time to process the payment. Be sure to pay all other bills a little early as well.

    Have a long history of a savings and checking account with a bank. Save as much money as possible to put as a down payment on the home. Obviously have more savings besides. There are always things that come up when you own a house.

    This method will have some other benefits as well. Many people look at your credit score to judge you. Insurance companies and potential employers are 2 that set rates or hire you based on this information.

    The bottom line is this. Your credit score is more and more a measure of a persons worth, and not just financial worth.

    I hope this helps.

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  • 1 decade ago

    Have a steady income, pay your bills on time.. don't pay late as that shows up on your credit report.

    There is no guarantee that a bank will lend you money.

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