A report commissioned by Experian CreditExpert has revealed that, even though almost two-fifths (39%) of 20-40 year olds surveyed are planning on making a Help to Buy application over the next year, many of them are woefully ill-prepared and could face difficulties securing their new home.
The survey found that a worrying 40% of hopefuls aren't on the electoral roll at their current address, a factor which could in itself mean a mortgage application may not be readily accepted – being registered is key to passing identity verification checks and ensuring a credit report is accurate, and keeping tabs on individual credit reports is another way to be totally prepared for any mortgage application.
However, the survey found that a quarter of would-be applicants have never actually checked their report. A further 14% have admitted to managing their credit poorly in the past, something which could again negatively affect chances of mortgage acceptance, while 14% think that having a good credit rating is less important for Help to Buy, when the opposite is more likely to be true.
Saving for a deposit, however, is perhaps the most important part of all. While 11% have managed to save an impressive £20,000+, around 7% of those intending to make a Help to Buy application this year have yet to save anything at all.
This could perhaps indicate that some homeowner hopefuls could well be disappointed, whilst also turning to the issue of affordability – a larger mortgage means larger repayments, so the bigger the deposit that can be saved the better.
Peter Turner, managing director of Experian Consumer Services, commented on the report:
"Help to Buy has brought homeownership to within touching distance for thousands of younger buyers earlier than they may have dreamt possible. But it's important to remember that the deposit is only part of the equation and consideration must be given to how much you can afford to borrow – and crucially repay in the years to come.
"A larger loan means lenders taking a close look at your ability to repay, and a large factor in that will be based on your credit history. Anyone looking to make the most of Help to Buy would be well advised to check their credit report to better understand their credit history, and ask for help if needed to ensure your credit report paints the best possible picture – before you make your application."
Find out more about Help to Buy
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