Changes in stamp duty helping younger generation get mortgage ready
Equifax reveals nearly half of Brits previously saw the Bank of Mum & Dad as the only way to get on the property ladder
The prospect for younger generations to get on the property ladder is looking more positive, following the announcement by Phillip Hammond that stamp duty will be abolished for first-time buyers buying a home of up to £300,000. YouGov research commissioned by Equifax, the credit information provider, shows that this prospect did not look so promising earlier this year, with 45% of respondents strongly agreeing that 'young people (16-24) today will generally be unable to get onto the property ladder without a considerable amount of financial support from their parents or grandparents'. And when looking at responses from young people themselves aged 18-34, the numbers increased to 51%.
Following the autumn budget announcement, Equifax is urging prospective homeowners to understand the importance of their credit information in the mortgage application process. Taking steps to understand the process and their own financial history will help them to get mortgage ready.
"The fact that stamp duty will be abolished for first-time buyers is a positive step but there are still many other factors to consider", said Lisa Hardstaff, credit information expert at Equifax. "The reality is that mortgage lenders will take a good look at a person's financial situation when assessing an application, which includes looking at information on their credit report. If they have missed or made a late payment on a credit or service agreement, this could be a cause for concern for prospective lenders. Also, having too many credit agreements could suggest that a person is financially overstretching themselves. Too few, however, and a lender may find it difficult to assess how someone will perform when it comes to repaying their mortgage.
"We would suggest that anyone considering applying for a mortgage should check their credit report at least six months before submitting their application. This will enable them to ensure that any changes that might need to be made – such as updating their electoral registration or making sure the report data is correct – are done before a mortgage application is made. This is also a good time to review how individuals are managing their current credit commitments. This is because establishing a pattern of good financial behaviour gives you the best chance of having a successful application at the interest rate and loan amount that you want."
Lenders also have a duty to assess the long-term affordability of an applicant. Affordability checks are designed to make sure the applicant can afford the repayments both now and in the future. These checks will also take into consideration potential interest rate increases, as well as significant life events that may affect future repayments. Borrowers should therefore expect to be asked questions about spending habits, childcare costs and future financial plans.
Home buyers can get a copy of their Equifax Credit Report & Score, which is accessible for 30 days free, via www.equifax.co.uk/Products/credit/credit-report. If customers do not cancel before the end of the 30-day free trial, the service will continue at £7.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.
* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2050 adults. Fieldwork was undertaken between 23rd - 24th February 2017. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
Equifax Inc. (Equifax) is a global information solutions company that uses trusted unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. The company organizes, assimilates and analyzes data on more than 820 million consumers and more than 91 million businesses worldwide, and its database includes employee data contributed from more than 7,100 employers
Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 9,900 employees worldwide.
Some noteworthy achievements for the company include: Named to the Top 100 American Banker FinTech Forward list (2015-2016); named a Top Technology Provider on the FinTech 100 list (2004-2016); named an InformationWeek Elite 100 Winner (2014-2015); named a Top Workplace by Atlanta Journal Constitution (2013-2017); named one of Fortune's World's Most Admired Companies (2011-2015); named one of Forbes' World's 100 Most Innovative Companies (2015-2017). For more information, visit www.equifax.com
Equifax Limited is one of the Equifax group companies based in the UK.
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