” Be open about your financial past before embarking on home ownership ” urge Equifax
Leading online credit information provider, Equifax, is urging couples looking to purchase their first home together to reveal any financial commitments they may have kept hidden from each other, before entering a new shared financial agreement such as a mortgage to buy a property. The warning comes as tougher affordability rules are set to be adopted by lenders this April.
The Mortgage Market Review – rules by which lenders must abide when considering mortgage applications – comes into effect in April 2014 and will see stringent affordability checks introduced to the application process. Couples buying their first home together will not only have their financial histories closely examined when applying for credit, but also their monthly income and outgoings so that lenders can be certain of their ability to repay their debts.
Equifax is advising consumers that even one missed payment on a credit agreement could be enough to mean lenders won’t grant a new mortgage and is urging potential home-buyers to review their credit report before they apply for a mortgage. This will enable them to spot any information that might need updating – such as being registered on the electoral roll – to put them in the best position to get a good deal.
Neil Munroe, External Affairs Director, Equifax comments : “With previous research* we have commissioned revealing that almost 1 in 5 have kept a personal loan or credit card debt secret from their partner, it is vital for couples planning to buy their first home together to ensure that their respective credit status will not have a detrimental effect on getting the best mortgage deal.”
“A conversation about past credit agreements might not be one that couples will find easy to have, but being open and honest with one another about previous financial problems could save a good deal of heartache in the long-run.”
“For couples looking to open a shared financial account together it is important to understand that your partner’s credit information will be linked to yours as long as the agreement exists. And this could not only affect the outcome of the lender’s decision, but will also affect any personal financial applications made in the future.”
Lenders will look at all the financial commitments someone has when new credit is applied for – and if there are joint financial agreements they are more than likely to look at the credit history of the partner too.
“Applying for a mortgage is one of the biggest financial commitments a couple will make and, for that reason, the levels of stress experienced during the process can be quite high. It’s important, therefore, that there are no unexpected surprises to add to stress levels – such as past financial problems that haven’t been mentioned”, concluded Neil Munroe. “Much better to be upfront before the start of the application process.”
LandlordReferencing.co.uk urge all those who are actively looking for rental accommodation in the private rented sector to be upfront and honest about their previous rental history, as the truth can be revealed via landlords and lettings agents who actively use Lifestyle Referencing through LRS.