The true cost of home-buying

True Cost Blog

Buying a home is more than shelling out for simply bricks and mortar. There are associated legal, administration and government fees to pay, as well as small things you may not have considered.

In fact, the average cost of moving home in the UK went up by £870 (9%) in the past year to almost £11,000 – in London it increased by £4,732, more than five times the national increase.

Budgeting for all the costs (big and small) at the start helps you work out what you can afford, before you make an offer on your dream home.

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Can switching accounts save you money?

Moving into a new home can be a great opportunity to check whether you’re getting the best deals from the bills you pay, whether that’s energy, broadband or credit cards.

Often, once an introductory deal is over many people allow their contracts to roll on to higher rates without even realising it – so they end up paying more each month for the same thing.

So now may be a good time to compare deals to make sure you’ve got one that suits you, and Experian can help you every step of the way.

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We are a credit broker not a lender, working with selected lenders.†

Switching energy providers could save you money

Did you know switching utilities could save you over £200 a year? Loyalty can often mean you’ll end up paying more – from October to December 2016, UK households spent £3.61 per day on water, electricity and gas, a rise of 11% on the previous quarter.

In fact, domestic utility switches were up 25% in the 12 months ending February 2017, and there’s no shortage of account providers and suppliers looking to attract new customers.

March 2017 Office of Gas and Electricity Markets (OFGEM) figures suggest there is as much as a £250 difference between the cheapest deals and the average standard variable tariff. Tariffs are changing frequently, with companies trying to get customers from their rivals and maintain their loyalty.

How to compare energy providers

Find a benchmark, and check as many companies as necessary before you find the one that gives you the best deal to suit your needs.

Look into customer service as well as price – you might see a low tariff in the compare charts, but then find out that comments on the forums suggest that the provider has a poor reputation.

It’s worth remembering that energy prices differ around the UK so the cheapest provider could change when you move home.  Reviewing deals every six months can ensure you are on the cheapest deals to suit your needs.

Changing should take a matter of minutes – it’s all done for you and all you usually need is your postcode and your email address.

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Switching to a different credit card could save you money

When you buy a new house, you’ll probably want to furnish it straight away and transform it into your dream home.

If you want to use a credit card, make sure you read about the different types to get the right one for you.

0% purchase cards could help spread out costs, giving you more time to pay it off and make flexible monthly payments without having to pay interest. Balance transfer cards can help you move credit card debt to another card with a lower rate or no rate at all, typically for a small transfer fee.

If you switch to a credit card with a 0% offer, make sure you never miss the minimum monthly repayment as this can result in additional charges and could negatively affect your credit score. If you can, try to clear the balance by the time the offer period ends and the card reverts to a standard rate.

Get credit cards you’re eligible for

You can compare credit cards matched to your credit information, and find which deals you’re more likely to be accepted for, with Experian CreditMatcher and it won’t negatively impact your credit rating.

We are a credit broker not a lender, working with selected lenders.†

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Experian CreditMatcher also allows you to check your Experian Credit Score FREE forever, to help give you an idea of how lenders may view you. With Experian, you can feel financially prepared and confident in your new home.

†Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.

Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to.

CreditMatcher is provided by Experian Ltd (Registered number 653331). Experian Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 738097). Experian Ltd is registered in England and Wales with registered office at The Sir John Peace Building, Experian Way, NG2 Business Park, Nottingham, NG80 1ZZ.

Copyright © 2017, Experian Ltd. All rights reserved.

Home-buying in 2017

Home-buying in 2017

Buying a new home can feel like a rollercoaster ride, with plenty of highs but also a few lows.

Almost a year on from the EU referendum, and with a General Election on the immediate horizon, how confident is the UK’s housing market – and what does it mean for home buyers?

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We are a credit broker not a lender, working with selected lenders.†

How confident is the housing market?

March 2017 saw 48,178 loans approved for house purchase, according to the British Bankers Association (BBA), no change year-on-year, while the average approved loan rose to £186,800. House prices fell by 0.4% in April 2017, though were up 2.6% on a year ago.

However, the same month, consumer confidence in the housing market dipped to 37%, the lowest since July 2013, after widespread prediction of a surge in inflation and a fall in consumer spending this year.

This comes even as overall consumer confidence remained on the up, with a sixth consecutive month of spending increases.

What do the experts predict for the UK housing market?

Some experts suggest that a time of such economic uncertainty is bound to have an impact on the housing market.

Zoopla CEO Alex Chesterman is cautious about seeing growth in the property market in 2017, and said: “Buying a home is one of the biggest and longest term decisions that people make so they tend to hold off making such important decisions in times of heightened uncertainty.”

According to John Perry, of 2017 UK Housing Review,  more houses need to be built regardless of any changes in immigration policy after Brexit – the current target, set before the referendum, is 227,000 homes a year up to 2024. He also suggests that most non-British EU citizens tend to rent in the private sector, so that it is the area that is most likely to be hit.

It’s arguable that the fewer houses being built, the more the chance that those in-demand properties will be more expensive, especially for first-time buyers.

Nationwide’s chief economist Robert Gardner agreed that uncertainty makes it hard to predict the prospects for house prices, but added: “Low interest rates are expected to help underpin demand while a shortage of homes on the market will continue to provide support for house prices.

Will house prices go up or down?

Uncertainty about the next 12 months, and the effects on the economy, could cause the market to slow down as buyers and sellers mull over what to do next.

The economy is the major factor on the housing market, so if the pound continues to struggle in 2017, it may affect house prices negatively but if things start to improve, house prices could rise.

Investing in property to make a profit – rather than just to have a long-term place to live –  is always a risk. So, it’s important to make sure that you don’t borrow more than you can afford, and try to find the right mortgage with the best rate.

What to do before applying for a mortgage

Whether you’re planning on buying your first home, stepping up to a bigger home or remortgaging, Experian’s tips can help you feel financially prepared & confident ahead of your mortgage application.

  • Check your Experian Credit Score to help you understand how lenders may view you
  • Try not to miss credit payments
  • Try not to apply for other credit in the six months before you apply for your mortgage
  • Manage credit accounts well
  • Register to vote at your current address

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†Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.

Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to. For information about the commission we receive from brokers for mortgages and secured loans click here.

CreditMatcher is provided by Experian Ltd (Registered number 653331). Experian Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 738097). Experian Ltd is registered in England and Wales with registered office at The Sir John Peace Building, Experian Way, NG2 Business Park, Nottingham, NG80 1ZZ.

Copyright © 2017, Experian Ltd. All rights reserved.

A guide to remortgaging

Remortgaging is on the up! It now accounts for about a third of all home loans.

When you remortgage, you take out a new loan with either your existing lender or another lender. According to the Council of Mortgage Lenders (CML), there were 34,700 loans for remortgage in December 2016, worth a total £5.8bn – that’s an increase of 13% in volume and 14% in value – while Paragon reported they now account for 39% of all mortgages handled by advisers.

Remortgaging could help you free up money for something you really want, help you pay your mortgage off quicker by moving to a lower rate, or help you better manage your monthly household outgoings. TSB found that homeowners could save an average of £96 a month by remortgaging to a lower fixed rate deal.

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7 tips for moving in to your new home

You’ve sealed the deal, inked the contract and are about to move into your new home at last. But before you take a breather, there’s still plenty to do – some of it is the fun part (furnishings) and some of it is necessary administration tasks. Each of those can be done in a finance-friendly way though.

Here are our top tips for moving in to your new home, and how you could make the most of your finances.

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How to make mortgage lenders love you

How to get a mortgage

One of the first steps to getting a mortgage is to impress the lender with your credibility. So here are a few simple steps to financially prepare yourself to help you get the mortgage you want.

In 2014 the Financial Policy Committee (FPC) said that only 15% of all new mortgage lending offered by banks and building societies could be more than 4.5 times a person’s income. Currently, mortgages of more than 4.5 times the borrower’s income is around 10% of lending.

So, if you want to be in the 15% of high loan-to-income applications, you’ll probably need to have:

  • A good deposit
  • A steady income
  • Little debt
  • A good credit score

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Home improvement: can it pay off?

Is improving your home worth it

We’re a nation of DIY lovers, aren’t we? Home improvement can be a double winner, as not only can it make your house into a home, it could also make it a more profitable asset for you.

And a lot of us think that now. An amazing 91% of homeowners think their house value has increased since they bought it, and by an average of £33,125, according to recent research from Co-op Insurance.

The research also showed that homeowners believe that renovation and decorative works they’ve carried out has led to an average £14,900 increase in property value.

But doing your homework before starting, working out exactly how you’re going to pay for the improvements, is important too.

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7 tips for first time home buyers

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Buying your first home can seem at times like climbing a particularly steep hill – daunting, confusing and with several pitfalls along the way.  Prices are still rising, with the average UK first-time buyer home now costing £184,973, 7% up on that of a year ago1.

And finding the money for a deposit without help from the Bank Of Mum And Dad can be a real challenge – the typical first-time buyer deposit is now £33,222 – that’s 133% of an average salary1. The average first-time buyer borrowed 3.49 times their income, and the average first-time buyer loan was an estimated £136,0001.

But with a few simple steps to prepare yourself financially, and make lenders see you in a positive light, you could approach buying your first home with a lot more confidence.

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5 things to know about registering to vote

Are you registered to vote in the UK? Yesterday Prime Minister Theresa May announced a General Election to take place on 8 June. To be eligible to vote, it’s likely you’ll need to register by midnight Monday 22 May. And did you know that being on the Electoral Roll could also help improve your credit score?

Here are five things you should know about registering to vote:

1.            How registering to vote could help improve your credit score. It’s important that your credit report includes your Electoral Roll details, as lenders use this information to help confirm your name, address and where you’ve lived before. This info usually has to be up to date before they are willing to offer a mortgage, a loan or any other form of financial account. Continue reading

Understanding why you were refused credit

The monthly financesIt can be a real pain when you make an unsuccessful credit application, especially when you can’t see why you were refused.

“But I’ve got a good credit score!”, “But I pay all my bills on time!”, “But I don’t even have a credit card!”, people may say.

When you apply for a credit card, a loan or even a mobile phone contract, it’s up to the lender to decide whether or not to lend to you – and they have varying methods to work out if you’re a risk worth taking.

New research from Experian* has found that 86% of Brits think that lenders should share information on the reasons why they have been refused credit.  If you’ve been turned down, only the lender can tell you why because only they know. If you ask, they should be able to give you the main reason.

Does being refused credit affect your credit score?

Experian’s research also found that 75% of the population think that being refused credit affects your credit score.

Being refused for credit is not, in itself, hazardous for your credit score. While your credit report will show that you applied for a credit card – it stays on for a year –  it won’t actually show whether or not you were accepted.

However, credit refusal can often lead to more attempts to get credit – and making a lot of applications in a short space of time could have a serious impact on your credit score, and your ability to get credit in the future.

That’s one reason why Experian have partnered with Credit Strategy for 2017 Credit Awareness Week, in which the aim is to empower people to improve their financial future.

Some common reasons to be refused credit:

  • You’ve missed or made late credit payments recently, which show up on your credit report
  • You’ve had a default or a CCJ in the past six years, which will show up on your credit report
  • You’ve made too many credit applications in a short space of time in the past six months
  • There are mistakes such as incorrect addresses or other errors on your application form
  • You may not fall into the target bracket for the type of credit you’ve applied for

Understanding the impact of your credit report

Did you know that 61% of homeowners have never checked their credit report? Your credit report is a summary of credit accounts you’ve had in the past six years – and that can include not only credit cards, loans and mortgages but also overdrafts, mobile phone contracts and certain utilities such as gas, electricity and water.

Lenders use it to take note of your repayment records and how well you’re coping with your finances, and use it, along with the info on your application form and info they might already have if you’re an existing customer, to help them make their lending decision.

In our survey, only 56% identified the lender as the one who makes the final decision for a credit card, with loan (61%) and mortgage (67%) not far ahead.

Interestingly, 76% said they would like to see more information on what they can do in the future to ensure they don’t get refused credit again.  Understanding how your credit report works could help you understand the reasons why you may have been refused credit – and help you manage your finances better in the future.

Understanding your credit score

We also found that the young don’t check their credit score. 85% of Brits aged 18-24 don’t know what their current credit score is, and almost three-quarters (73%) have never checked their credit score.

Your Experian Credit Score tells you how lenders may view you, which is useful when you apply for credit – and is FREE FOREVER. The higher your credit score, the more chance of being accepted for credit, at the best rates.

* Conducted by YouGov on behalf of CFA, 10th – 13th March 2017