A lady washing vegetables at a sink

The importance of looking after ‘future you’ today

Have you ever put something off – maybe the washing up or a trip to the tip – and said ‘that’s something for future me to worry about’?

Not everybody will have done this. Plenty of us are keen to get all tasks and chores off their plate before taking a deep breath and relaxing. 

But others are less fussed about such matters, happy to shelve things for their future selves to sort when the time is right.

If you delay the washing up too long, you might get a smelly kitchen and a distinct lack of cutlery to use. It’s unpleasant, but in the grand scheme of things, it’s not a disaster and is easily rectified.

But when it comes to buying a home, leaving things for later isn’t always the way to go. 

I have plenty of time to buy a home – why rush it?

Well, don’t rush it of course! But don’t think that at some point everything will magically fall into place either, because life doesn’t really work like that.

If you are in your 20s or 30s and not yet a homeowner, then it’s easy to not be too concerned about what your living situation will be when you are at retirement age. 

But not having a home that you can call your own when you reach retirement age is a circumstance many believe it’s best to avoid.

Why buy a home?

Sounds like a simple question, but it’s a complicated business.

Owning your own home and paying off a mortgage before you retire means that you will have a property that is unequivocally yours. This means you will have a place of your own that you will own outright. This in and of itself is enough reason for many people to seek a mortgage at an early age.

A second reason is the cost of paying for a property once you are past retirement age. Rent costs will continue regardless of your age, and although pensions and savings can help here, many would say it is preferable to not have to pay such outgoings once you stop working. In a worst case scenario, this need to keep paying rent could prevent you from retiring outright.

A third reason is that the closer you get to retirement age before purchasing a home means you will have less time to pay it off, given that most mortgages will have a repayment period of around 25 years. This means if you buy a home after the age of 40, you may want to have a shorter repayment period in order to pay off your mortgage before retirement. But that will mean higher outgoings for a sustained period. Sorting a mortgage earlier in life can reduce the amount you end up paying each month on your mortgage.

Fourth and finally, if you reach a stage where your house is too large for your requirements once in retirement, owning your home gives you the chance to sell up and downgrade. This presents the opportunity to secure a tidy sum of money that can then fund your living moving forwards.

Is now the time to move?

We can’t avoid the fact that purchasing a home at present isn’t the easiest thing in the world. The cost of housing is far from ideal when it comes to entering the market, and the general cost of living is limiting the ability of people to save the kind of funds that would allow them to get on the property ladder.

But that doesn’t mean that this is something to put off and let ‘future you’ handle outright. Much of the time, it’s actually more about your circumstances – both personal and financial.

For contractors and freelancers seeking a mortgage, having a steady amount of money saved up and ready to spend on a deposit for a home is a great position to be in. If this is something you are keen to move ahead with, then finding a contractor mortgage expert or freelance mortgage broker can help set you on the right path.

What’s more, owning your own home as a contractor or freelancer is advantageous because of the security such a purchase brings. The very nature of freelancing or contracting is that work is subject to change over time. Having a home of your own, particularly as you near retirement age, can give you the kind of stability that people seek. 

The reality is the more groundwork you put in now, the happier ‘future you’ will be. A good step is getting some free mortgage advice, and seeing what could work for you when it comes to buying your own home. 

A blue wall with a frame in the shape of a zero

New zero deposit mortgage set to hit the market

Getting on the property ladder can be a real challenge. One of the main reasons for this is because in order to secure a mortgage, typically a healthy deposit needs to be paid.

For some, saving for a deposit is a relatively easy thing to do. But many people find this to be extremely challenging. 

With the price of housing and the cost of living going up, for many people the chances of saving a decent amount for a deposit will inevitably take a hit.

This makes the prospect of the UK’s first ever zero deposit mortgage hitting the market a particularly interesting prospect.

In the latest Roots Mortgages blog, we take a look at what this is and what it could mean for potential buyers.

Who is behind this?

Proportunity is a London-based lender with an aim of making home ownership a possibility for everyone.

The company is looking to support 1 million people secure a home of their own by 2030, and has an ethos very much focused on keeping things simple in what can be a complicated industry. 

The company has to date helped finance over £100 million worth of property sales, and Proportunity is committed to harnessing innovation in the mortgage market.

Tell me about this zero deposit mortgage then

Essentially, Proportunity is working towards the release of a zero percent deposit mortgage product for home ownership. 

This means that a Proportunity loan would cover the entire value of the home a person is wishing to buy, rather than just a large percentage of the property’s cost.

The company says that people who can afford to pay rent can afford to pay a mortgage, and is encouraging people to make their money work for them and not their landlord.

According to the Proportunity website, ‘Our Proportunity Home Index (PHI) helps identify which homes are better or fair valued, so when we invest with you, we believe we’re investing together in a good thing – and that’s what enables us to give you the full loan value for your new home.’

There is a dedicated page on the Proportunity site where people can find out more and register their interest in the zero deposit mortgage opportunity.

Is a zero deposit too good to be true?

If you are struggling to put together a deposit but are keen to get on the property ladder as soon as possible, then the idea of zero deposit is naturally going to appeal.

What is less clear at this stage is what kind of properties may be available, and what kind of terms and conditions will apply when taking out a mortgage of this type.

It’s also important to note that at present, the zero deposit mortgage is still in development. But the fact that Proportunity has promoted the product makes it seem like it is something the company is committed to pushing out there.

Ultimately, it’s too early to tell if this is a gimmick or a genuine option for buyers. If it does take off and other lenders follow suit however, then this has the potential to be something of a watershed moment within the mortgage market.

For contractors and freelancers who have long faced challenges around proving affordability, a zero deposit mortgage is something many will naturally be curious about.

What’s not clear is how things might work in practice for those seeking a contractor mortgage or freelancer mortgage. In fact, a lot is yet to be clarified about how this will all work in reality.

Ultimately, the proof will be in the pudding with zero deposit mortgages, and whether they are here to stay or something of a publicity stunt. It’s good for lenders to be looking into ways to make homes more affordable, but whether this is a way to go about it remains to be seen.

The key to securing a self-employed mortgage

Self-employed working has a number of benefits. Not having to answer to a boss is one of them, while having greater control of the work you do is another. If you are self-employed and reading this article, there’s a fair chance you will be able to add a few more benefits to that list.

But there have historically been some drawbacks to working for yourself. One of them has been difficulties in securing a mortgage.

The latest MBT Affordability Index however suggests that the gap between self-employed workers and traditional workers when securing mortgages has got very small indeed. The latest data shows that 73% of self-employed applicants are securing the mortgage they sought, compared to 75% of traditional workers.

That small gap has got us thinking – what has changed to enable more self-employed workers to get the kind of deal they are looking for? 

Here are five reasons we can think of here at Roots Mortgages.

1 – Better understanding

One of the biggest barriers to self-employed workers securing mortgages historically was a level of ignorance on the part of lenders. 

A poor understanding of how self-employed workers made their money, and a lack of knowledge regarding practices and the level of stability self-employed work can offer has prevented many workers securing the kind of mortgage they would have liked over the years.

A big factor here was proving affordability. Lenders were historically too reliant on certain ways of proving affordability, and all too often self-employed workers found it difficult to do this.

Thankfully, things have come a long way, with more and more lenders having a better understanding of how self-employment actually works. 

2 – More lenders looking to support self-employed workers

There was a time when self-employed workers were not given much time by some lenders, many of whom will have missed opportunities to provide for this type of worker.

But there has been a change in this regard, with more lenders making a greater effort to cater for self-employed workers through specific initiatives and greater flexibility.

As well as traditional big lenders being more willing to enter discussions with self-employed workers, new players have entered the market and catered to this group as well.

An example is Vida Homeloans, who recently made a series of changes to their lending criteria to make life easier for contractors to secure a mortgage deal. 

3 – Changes to LTV 

LTV is an acronym you will come across regularly when seeking a mortgage, and stands for Loan To Value. This means the size of the loan that a lender is willing to offer to an applicant in relation to the overall value of a property. The higher the percentage of the LTV on offer, the lower the initial deposit needs to be, and the easier it is to secure a mortgage deal.

Unfortunately, contractors and freelancers have long faced relatively low LTV offerings from lenders. 75% has been a common figure that contractors and freelancers might hear when enquiring about LTV. But that means a large deposit would need to be put together, which has inhibited some potential buyers’ ability to move forward with their plans.

Thankfully there has been some movement in this area too, with some major lenders extending their LTV offer for self-employed workers. An example is Beverley Building Society, who has recently extended their maximum LTV to 80%

Hopefully more and more lenders will follow suit and make things easier for self-employed workers when it comes to LTV.

4 – Meeting demand

The fact of the matter is that mortgage lenders need to make money themselves. They are businesses with goals and targets, and when there’s a big potential group to tap into, such as the self-employed, it would be ill-advised to rule out making changes that could help a lender cater for them.

What’s more, the fact of the matter is that self-employed workers are resilient and determined. When they want to get on the property ladder, the vast majority will dig their heels in and try their utmost to get where they want to be. 

There is currently very high demand for mortgages, while UK movers are confident of securing a mortgage despite particular challenges such as the Bank of England’s base rate rise and the cost of living crisis.

Self-employed workers will inevitably be contributing to this. So in this context, it makes sense for lenders to do what they can to cater to all-comers, regardless of the way in which they work. 

5 – More experienced brokers

The historic issues faced by self-employed workers presented an opportunity for businesses to help offer support, guidance and answers to the challenges. 

We at Roots Mortgages firmly class ourselves in that group, having helped countless contractors and freelancers to secure the kind of mortgage deal they dream of. Our expertise has been built over time, and statistics such as those included in the latest MBT Affordability Index can be interpreted as indicative of a greater level of effectiveness and success in the work we do. 

If you are a self-employed worker keen to secure a home of your own, then using a mortgage broker can put you on the right path. Don’t think of brokers as a luxury you can’t afford to have. The fact of the matter is that brokers are the perfect accomplice to finding that ideal self-employed mortgage.

 

A man celebrating when reading emails

UK movers remain confident of securing a mortgage

Having a positive attitude can get you a long way in life, and it seems that the majority of people seeking a new home are adopting this policy.

Though the headlines might not be overly heart-warming at present, this hasn’t dampened the spirits of people in the UK who are looking for a new home or selling their current one.

Insight from On The Market indicates there is a high level of confidence among home movers at present. This is despite the cost of living crisis, interest rate hikes, and other economic uncertainties.

The latest Roots Mortgages blog takes a look at what’s what.

Strongly positive sentiments

On The Market has looked into the mortgage market and aimed to determine how those in the process of buying and selling properties are feeling about their prospects. 

According to the findings, 76% of buyers were confident that they would purchase a property within the next three months. This represents a slight increase on findings from previous months. A further 18% of buyers were confident of purchasing a home within six months.

This confidence was pretty universal across the UK, with all regions registering between 74% and 79% of buyers being confident of purchasing a home within three months.

This confidence was also reflected in sellers, with 82% confident of selling their property within the next 3 months. A further 13% were confident of selling their property within 6 months.

The percentage of movers with concerns about securing a mortgage to fund the purchase of their next property was very low, at just 4% of movers interviewed.

Are we reaching a ‘New Normal’ for the mortgage market?

It could certainly be interpreted that way. With the disruption of the COVID-19 pandemic pretty much in the rear view mirror now, there are signs that the mortgage industry has steadied, albeit at what could be described as an ‘elevated’ level compared to the situation pre-pandemic.

Moving forwards, elements such as the cost of living crisis and interest rate rises have the potential to impact the mortgage market without doubt. It appears however that to date, those factors are yet to take their toll on seller and buyer sentiment. 

How long this lasts remains to be seen. But given the fact that buying or selling a home is a fairly lengthy process, it could be a while before the impact of people being put off proceeding with such plans is felt.

What’s more, buying or selling a home is often a big step that people have been building up to for a fair while. That means that these plans are unlikely to be shelved flippantly.

Keeping things moving

It would be easy as a contractor or freelancer to read the news and think selling or buying a home is something that can wait.

But the fact of the matter is that things are unlikely to quickly go back to how they were pre-pandemic, and the mortgage market is adapting accordingly.

The good news is that the majority of buyers and sellers are confident in that being the case. That means your own foray into the mortgage world shouldn’t be a difficult one. There is a level of stability in place that should allow for your plans to continue unimpeded, provided you take the right steps and work with the right people.

A contractor mortgage broker or freelancer mortgage broker can make negotiating the new normal within the mortgage market that bit easier. Taking the step of getting that support adds additional security to your plans, and takes you that bit closer to buying your dream home, or selling your current property. 

A woman walking past the Bank of England in London

What does the Bank of England’s Base Rate rise mean?

The current financial situation is not one that is likely to bring many smiles to faces. From big business to people simply trying to make ends meet, the cost of living is proving a challenge across the board.

As a homeowner, or as somebody wanting to be able to call themselves a homeowner in the near future, this current situation is one to keep an eye on for sure. 

A specific change has taken place recently which is worth knowing about, and it involves the Bank of England. They have increased their base rate, which has repercussions across the financial climate here in the UK. 

In this blog, we take a look at what this means, and what the effects could be for you as somebody who owns, or is looking to own, their own home.

What is the Bank of England’s Base Rate?

The Bank of England’s base rate is the rate it charges to other banks and to mortgage lenders when borrowing money. So with regards to a person’s mortgage, lenders will borrow money from the Bank of England and then that money will be used to cover the cost of purchasing a property. The homeowner then pays that figure back to the lender in the form of mortgage repayments.

Lenders themselves however have to cover the interest rates they are being charged by the Bank of England. One typical way in which they do this is by increasing their own mortgage rates for borrowers.

What increase has taken place?

The big news is that the Bank of England has recently increased the base rate of interest it charges. 

The rate was previously 0.75%. Unfortunately however, this rate has now been raised by 0.25% to 1%.

What effect will this have on my mortgage?

This depends on the type of mortgage you have. If you have a fixed rate mortgage, then no change should take place until the end of the fixed period for which you have signed up.

If you have a variable rate mortgage however, then you can expect to see some unwanted but unavoidable increases to your mortgage repayments in the near future.

If this applies to you, then this is some more unwanted financial news on top of all the other less than desirable headlines over the past few weeks and months.

What should I do?

If you are approaching the end of a fixed mortgage term, or entering the market and looking for a fixed mortgage deal, then opting for another fixed rate deal is not a bad option. This will at least provide stability and consistency in terms of your outgoings.

This will also be beneficial if the cost of living crisis and general financial upheaval continues for a sustained period, which many expect it to do. 

A variable mortgage at this point in time is a riskier option, as the economic market seems to only be moving in one direction at present. A variable rate is an option that leaves you susceptible to fluctuation and the potential of having to make repayments beyond what you had anticipated.

It is of course possible to switch from a variable rate to a fixed rate, and this is an option worth considering – provided you can find a deal that works for you.

Stick or twist when getting on the ladder?

If you are considering making the move onto the property ladder any time soon, then the cost of living crisis, base rate increase, and your own affordability criteria are all factors that need to be carefully looked into.

It is by no means impossible to get onto the property ladder at present, and there are ample reasons for doing so. But it should be stressed that doing so haphazardly and without the right level of planning and careful decision making could backfire.

For contractors and freelancers who are looking for a mortgage, our free mortgage advice can set you on the right path to find the kind of deal which will serve you well over time. But be sure to consider all factors before diving into a mortgage, as the current economic situation is one that needs a careful approach to say the least.

A plant growing from a vase of coins

Don’t let the cost of living ruin your mortgage plans

If you have noticed yourself taking a few sharp intakes of breath due to the cost of bills and other outgoings recently, suffice it to say you are not alone.

The cost of living crisis is the term being given to the current economic situation, and it will have been hard to miss the increase in costs for certain products and services.

If your finances were tight previously, then they are likely to be even tighter now. Equally, if you are looking to save up towards a specific goal, then being able to continuously squirrel away the amount of cash you desire can quickly get tough.

One reason for doing the latter is saving for a home. But finding the right balance between living in the present and saving for your future home can be a difficulty.

In the latest Roots Mortgages blog, we have put together a few ideas to help you stay on track with your savings, while not having to suffer too badly in the present. Take a look.

1 – Shift your cash around straight after payday

Payday is something we all look forward to, and it’s nice to see your accounts fill back up after a few weeks of spending.

If you are planning on putting money aside in order to save for a home, we recommend getting a fixed amount in mind and doing this as soon as your pay cheque comes in. 

This way, your saving is less likely to be based on what’s left at the end of the month, and you get a consistent stream into your saving pot by being proactive.

You also have the option of taking money back out of your savings pot if absolutely needs be, but hopefully that won’t be the case!

2 – Look at your monthly spending and make some decisions

If you are serious about saving up, we recommend going through your monthly spending with a fine comb and finding the areas where you can avoid some expenditure.

Things like the places you shop and finding cheaper alternatives, and cutting back on your household energy use, are a good place to start.

Another popular option many people are choosing to do is cut back on their streaming service subscriptions. There may be other things you are paying for each month, but rarely or simply never use anymore. The only reason they’re still on your outgoings is that you’ve just not got around to ending them or cannot be bothered!

That kind of approach will only elongate the amount of time it takes for you to get your dream home sorted. So make some positive changes now and start saving.

3 – Cut back on treats, or find different ones

Saving for a home comes with an element of sacrifice, as you could be spending your money on other things. But you have a choice about what and how many things you give up in the name of saving.

If there are a few personal treats that you like – be it a fancy dinner with your partner or a mini break for example – then this chunk of money could be spent elsewhere if you were willing to give such luxuries up for a few months.

And that’s not to say you can’t do nice things. Used to fancy hotels? Camping’s a good alternative and will give you all the more motivation to save and get a proper roof over your head sooner rather than later!

4 – Consider getting fit on your commute

Petrol prices have been one of the biggest risers during the cost of living crisis. And while post-pandemic, many of us are working at home more frequently, plenty of us are still guzzling up the miles, potentially on the commute.

Public transport can also be a big drain on your finances over the course of time while commuting. So finding ways to keep this as cheap as possible is a great idea.

Asking for more time working from home is a good idea, while cycling to work is a great option if you are not too far from your office. In fact, many places of work these days have initiatives in place to support cycling to work, with some having shower facilities to ensure you don’t stink out that morning meeting. And what’s more, cycling is a great way to lose some excess pounds.

Walking or running to the office, if feasible, are equally excellent ways to save some cash, move closer to your goals, feel better within yourself and lose some weight. What’s not to like!

5 – Get a clear idea of what you need to save

One really good way of arranging your savings is for you to take the time to set a clear goal to work towards. That way, you can more easily plan out your monthly savings goal, and get a clearer idea of when you will be able to start looking seriously for a mortgage.

Planning and being conscientious is a really positive trait when it comes to getting your mortgage sorted. The more information you have and good advice you get, the better stead you stand yourself in.

We at Root Mortgages are specialists in contractor mortgages and freelancer mortgages, as well as having plenty of experience of dealing with residential mortgages. We are therefore in a great position to provide you with free mortgage advice and give you a clear idea of the path you want to be taking in order to get the home you need.

Saving for a home is not always easy but it is hugely worthwhile once you get hold of the keys to a place you can call your own. Getting in good habits despite the adversity of the cost of living crisis can turn your vision into a reality sooner rather than later.

Length of Mortgage – Things to consider

In the modern age, we have all got used to having things available and ready to use in super quick times. Be it our ability to watch a video online or get our favourite takeaway delivered, we like things to be readily available for us to enjoy.

Despite this, there are still plenty of things that need to be given time. A fine wine is a good example. But a more relevant one for us is securing a mortgage. This is something it’s best not to rush.

We at Roots Mortgages are experts in providing contractor mortgage brokerage services, as well as freelancer mortgage and residential mortgage guidance. As part of this, we feel it our responsibility to ensure all areas are covered when you are putting together a mortgage application.

One thing to bring into your thoughts is the length of your mortgage, and particularly the age at which you will pay off your mortgage.

Looking into the future

There aren’t many things we have to think about which involve having to mentally fast forward a few decades, and envision ourselves a lot older and (possibly) a lot wiser.

But buying a home is one of those things. The very nature of a mortgage commitment is one that will likely span decades. But this could mean that you will be, to be blunt, getting on a bit by the time the full amount is paid off.

When looking into mortgage options then, it is vitally important to consider the age you will be when your mortgage repayments conclude. 

Retirement age vs Mortgage repayments

When a certain age is reached, you can start to turn your thoughts to your retirement and what that extra time may be able to afford you the opportunity to do.

But depending on the length of your mortgage deal, there is a chance that your envisaged retirement age, and the age at which you finish paying off your home, could be very close to one another.

They could even overlap, meaning that you might still be paying off your mortgage after you stop working. Given the reduced income retirement brings, this is not an ideal situation.

Striking a difficult balance

There are a few factors at play that make striking this balance between retirement and mortgage length a particularly tricky thing to do.

One is the increasing average age at which a person takes the step onto the property ladder. Data from Trussle indicates that this average age has risen from 29 to 32 over the course of the past decade.

Additionally, longer term mortgages are increasingly the go-to. This provides an applicant with more affordable mortgage repayments on a monthly basis, and gives them the chance to purchase the home they want sooner rather than later.

The downside of this of course is the higher likelihood of mortgage repayments being something still to consider in older age. 

This is something of a growing trend, as the last decade has also seen a huge rise in 35-year-mortgages. The Financial Conduct Authority has released information indicating that over 63,000 mortgage deals covering 35 years of repayments have been taken out by UK buyers in the past 10 years. This is a 75% year-on-year increase.

Considering all factors

It can be easy to get excited about your plans to buy a home, and any impediment to that can feel really frustrating. 

But the length of your mortgage, and whether this is going to encroach on your retirement plans is something to be mindful of, however far away they may feel.

Larger deposits can help reduce mortgage terms, while being willing to cover more of your mortgage each month can serve you better over time depending on your income.

However you choose to examine this in relation to your own mortgage application, be sure to put the time into protecting ‘future you’ from a headache down the line when it comes to repaying your mortgage.

A frustrated mortgage applicant

Refused a mortgage? Don’t give up!

Not getting something we want is never a nice feeling. This applies across our lives. Be it a table at a restaurant or a promotion at work, this kind of thing leaves a bad taste in the mouth.

Anybody looking to secure a mortgage will obviously want to be accepted as soon as possible. But the reality is that this is often not the case. 

The truth is being accepted for a mortgage can be a challenge. This challenge can become even more difficult if you are self-employed as a contractor or freelancer, or if your credit score isn’t the best. 

This means that being refused a mortgage is something many people have to deal with. Some new data on just how many have faced refusals has come to light this week. But there is also a distinct cause for optimism in the latest findings.

Reasons for refusals

People may be refused a mortgage for a host of reasons. Poor credit scores are a common example, with this being a problem for many lenders when it comes to committing to lending to such an applicant.

Means of income is another area that some lenders struggle with. This is where self-employed workers often come a cropper.

Naturally, each mortgage application will have its unique elements. If a broker is not used, it is the responsibility of the applicant to ensure the lender is seeing everything they need to see in order to proceed.

High refusal rates

If you have been refused a mortgage by a lender, you are very much not alone.

Recent research from Bluestone Mortgages has found that 23% of those applicants typically underserved by high street lenders, including the self-employed, have been refused a mortgage at some point.

Additionally, younger applicants are more likely to have been turned away when applying for a mortgage compared to older applicants. 77% of applicants typically underserved by high street lenders and between the ages of 18 and 34 have been refused a mortgage. This is compared to 55% for people aged 35-44, and 13% for those over 55.

Is this cause for concern?

It’s not ideal for those who are being refused, but there are definite reasons to not be too concerned.

The first reason is that additional findings from Bluestone Mortgages indicate that 98% of this type of applicant who is refused at some stage does go on to secure a mortgage. This alone should spur on anybody who has not secured the mortgage they would like as of yet.

The second is that the lenders who are doing the refusing are stepping up and not leaving applicants in the lurch completely. They are instead providing advice and guidance that is helping applicants to get the mortgage deal they crave.

This is being done in two main ways. One way of advising is to point applicants in the direction of other lenders who may be in a better position to meet their requirements and offer a mortgage. 

The second is to recommend specialist mortgage brokers who can support and aid their attempts to secure a mortgage.

Getting on the right path

It can be demoralising to be refused a mortgage. But if this has happened to you, there is no reason to lose all hope of securing one down the line.

Often it is simply a case of not being a good fit for the lender you have spoken with. That doesn’t mean that your specific circumstances will rule you out of the running for all lenders however. 

Doing the legwork and finding lenders who are better placed is a great step to take. This can be difficult to do alone though, so having a mortgage broker in your corner is really advantageous.

Roots Mortgages knows the right lenders to approach and how to give yourself a better chance of success as a self-employed worker. Our position as a leading contractor mortgage broker and freelancer mortgage broker means we can offer the expert guidance you need to get your mortgage plans moving in the right direction.

A person using credit cards to buy

Credit score putting you off applying for a mortgage?

There are a few things that you ideally don’t want to be associated with in life. Financially speaking, one of the main ones to avoid is a poor credit score.

A credit score is an important figure that will be used by anybody who is in a position to lend you money. Be this a bank, a payday lender or a building society, a credit score is something that will be factored in.

New research has found that concerns around poor credit scores are putting a significant proportion of people off applying for a home. 

So in an attempt to offer advice to contractors and freelancers who may share these concerns, we have taken a look at what is afoot.

What exactly is a credit score?

In our experience, plenty of people know the term credit score, but many aren’t sure exactly what it means.

Put simply, a credit score is a number between X and Y. Differing providers of credit scores use slightly different scales, but lets say they use a scale of 300 to 850. Your score indicates how worthy of financial credit you are to a lender. The closer to 850 a person’s credit score is, the more likely the lender is to proceed with their application. 

Factors that influence a person’s credit score include their repayment history, the length of their credit history, the types of loans they have taken in the past or are currently repaying, and the total debt that a person has. 

Do I need to know my credit score?

If you have plans to apply for a home in the next year or so, then knowing your credit score is very useful.

Your credit score will be an important statistic throughout the application process, and will be factored in by brokers and lenders to help evaluate what kind of mortgage you might be able to get.

My credit score is not great – Is that a problem?

According to new research from The Mortgage Lender, one in every ten people in Britain has been put off applying for mortgages due to fears about low credit scores.

However, a low credit score is not the end of the world by any means. If you have plans to buy a home in the coming years, there are things you can do to improve your credit score.

Paying your bills on time is an important step to take for certain, while an obvious one is looking to pay off as much debt as you can. This can seem challenging when saving up for a deposit, but will be very beneficial if you are able to do so.

Also look to stay on top of your credit report, and see if there may be any errors contained within it. If something’s been miscalculated, then amending this could see your score move in the right direction quickly.

If you have unused credit card accounts, look to get rid of them as soon as possible. And also aim not to max out on available credit, as this will hamper your attempts to improve your credit score.

It’s all about being more savvy with your money and taking a stable and mature approach to your financial situation.

Is not knowing my credit score a bad thing?

It’s not ideal if you are looking to apply for a mortgage soon. But you certainly are not alone if you find yourself in this boat. 

The research from The Mortgage Lender has found that 62% of UK adults surveyed didn’t know their credit score. Interestingly, half of those surveyed who were looking to buy a house in the next year did not know their credit score.

Additionally, only 18% of those surveyed had taken steps to improve their credit score. 

So all in all, if this is you then you shouldn’t feel out of the loop. But if you have aspirations to get a property of your own in the near future, getting to grips with your credit score is a very good idea.

Getting on top of your credit score

If you are a contractor or freelancer with ambitions to get on the property ladder, your credit score might not be something you have overly thought about.

If you do not know it, then getting clarity on what it is at present is a great first step. Then following some of the suggestions outlined above to help enhance your credit score is certainly worthwhile.

By improving your credit score sooner rather than later, you give yourself a better chance of securing the home you want.

Another consideration is that there are plenty of products out there in the mortgage market which can meet the requirements of people with low credit scores, so don’t lose hope simply because your credit score is not perfect.

Trusting a contractor mortgage broker or freelance mortgage broker such as Roots Mortgages can be the first step towards finding your dream home with the perfect mortgage.

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Vida makes positive changes for contractors

We at Roots Mortgages specialise in working with contractors and freelancers to help them negotiate the mortgage market.

In case you are new to contracting or freelancing, or work in this way but have not previously thought about buying a home, then it’s important to know that it isn’t always a straightforward process.

In truth, buying a home is rarely a simple thing, regardless of your profession. But over the years, many contractors and freelancers have found it particularly problematic.

We are dead set on turning that tide however, and our goal is to help as many contractors and freelancers achieve their property dreams as we can. 

With this in mind, it is always satisfying to see others in the industry making it easier for contractors and freelancers too. This week, a specialist lender has made enhancements to their affordability criteria for contractors. So we wanted to take a look at what’s on offer.

Which lender is this?

The lender in question is Vida Homeloans. This is a relatively young company, only founded in 2016.

However, Vida has developed a reputation in that time thanks to its commitment to helping every person find a home ‘no matter their circumstances’.

What are the new lending criteria for contractors?

Vida has made a series of changes to its affordability criteria with the aim of making it easier for contractors to land a mortgage deal that works for them.

An important part of this is contractors being able to borrow up to 48 times their weekly rate. This provides greater clarity for contractors when it comes to understanding the kind of figures they can borrow to support their homebuying goals.

Contractors will be considered from the first day of their contract, provided they have at least one year of employment in a similar line of work.

Furthermore, contractors will still be able to apply for a mortgage even if they only have three months left on their current contract.

This is all to create a smoother and easier process for contractors seeking the support they need to get the home they want. 

According to Vida’s director of mortgage distribution, the changes are all part of an effort to make the plans of contractors easier to fulfill.

Richard Tugwell said: “We are determined to provide attractive, accessible products that support contractors and the wider self-employed market, who have been cut out of traditional high-street lending. We continue to see strong demand from our intermediary partners and want to continue growing our lending and offering a great service to brokers and customers.”

Greater awareness of contractor needs

These changes from Vida are a concerted effort to make life easier for contractors, in a space which has not always been friendly to them. 

Securing mortgages has proved challenging for many self-employed workers over the years, so seeing options such as the one Vida has available within the wider market should be something appreciated by contractors.

Having said this, Vida’s offering may not be the right option for you, and we as contractor mortgage brokers can help provide you with the guidance you need to find that perfect choice. 

But Vida should be congratulated for making positive changes within a market where ‘playing it safe’ can all too often be the name of the game for lenders.

A couple unpacking boxes

First-time buyers spending less than renters per month

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Self-employed lender extends maximum LTV value

There are a lot of negative headlines out there at the moment. So rather than add to that, we are pleased to be able to bring something positive your way this week.Read More

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