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Failing to sort your finances

A common mistake many first time buyers make is failing to sort their finances. Before you start looking for that perfect home, you should ensure your finances are in shape and ready for your mortgage application. An easy way to check your financial health is to obtain a copy of your credit report. Before a bank or building society offers you a home loan, they will often look up your credit score to get an idea of how likely you are to pay the money back.  

Under the Consumer Credit Act, you can write to one of the credit reference agencies, such as Experian or Equifax, and ask to see your file for a cost of £2. Alternatively, if you need to see your report in a hurry, you can check your file online. CreditExpert from Experian offers a free 30-day trial, which enables you to see your credit report, and then charges £14.99 a month for continued access. Equifax’s Credit Watch Gold service also offers a 30-day free trial and charges £7.50 a month for the rest of the year, but these can be cancelled once you have seen your report.

And it doesn’t take much to negatively impact your credit score either. Just one missed or late payment on a credit card, loan or mobile phone bill, could knock you out of the running for the best deals or interest rates.

If your credit rating isn’t in the best shape, don’t fret – there are things you can do to fix it. For instance, if you spot any mistakes, such as an incorrect address (surprisingly common), contact the credit reference agency to set it right. According to the Money Advice Service, they have 28 days in which to remove the information or explain why it will remain on record. During that time the ‘mistake’ will be marked as ‘disputed information’ and lenders are not allowed to rely on it when assessing your credit rating.

Similarly, if there’s information on your file that, while accurate, may not reflect your current situation – for example, you got into debt after being made redundant but you are now employed – you can add a ‘notice of correction’ to your credit report. This is a statement of up to 200 words about what happened.

Its also worth seeking expert advice when preparing to buy your first home. For instance, a financial adviser can help you build a savings plan to grow your money for a deposit and work out your budget so that you don’t end up borrowing more than you can afford. Choosing a good mortgage broker can help you through the whole process of getting onto the property ladder, right from working out how much you can afford, to finding the right mortgage and completing your purchase.

Check out our guide on how to make sure you are in the best possible position to have a mortgage approved.

Check your finances are in shape


Check your credit score


Speak to a financial advisor