Banks / Mortgages
- Thread starter DAIR
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Soldato
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Guess they do not know who paid your rent, rather that your rent was paid, all they care about is if you can pay in future, and now if rates go up.
Because it isn't credit.
Surely banks take into account whether or not you've paid bills on time. If those bills are direct debits they count, no?
Anyway, I posted about this a while ago. It's a new(ish) scheme that might gain some traction. Seems a bit of a hassle to set up though, which is a shame.
http://www.moneysavingexpert.com/mortgages/rental-exchange-scheme?
It's quite a travesty that paying rent on time for years and years and years isn't taken into account on a mortgage application. What better way for a bank to judge the character of the person they are lending to than one's ability to pay their housing costs without fail
Because even if you have a long rental history, at a high value relative to income (say £1000 rent on £1500 take home/month), it (most likely!) isn't over a 25 year period, and nor does rent cover a lot of the maintenance work a house requires. It also doesn't consider what would happen if you lost your job etc.
They did ask me how much my rent was in mortgage application but I doubt it makes much of a difference
They did ask me how much my rent was in mortgage application but I doubt it makes much of a difference
Soldato
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Having not rented in ages (been saving living with parents) I'm hoping that will indeed not account for anything when I come to get a mortgage in the next year or so - my credit rating is good seemingly (according to noddle anyway) so am hoping it'll be fine!
I'm talking more from an affordability stand point.
But what else do you have that is over a 25yr period for comparison? I don't understand that point. It's not like you would have stayed with the same utility providers for 25yrs.
I didn't realise we were comparing a previous mortgage, paid before applying for the new one. I was more in the mindset of a FTB.
Because they don't trust plebs (landlords and tenants alike) but do trust corporate establishments like banks, credit (card) providers, and utility companies to not tell porkies when they provide proof of your payments.
Because most banks don't like people who are essentially setting fire to money just so they don't have to live with their parents.
Joking aside though, this is technically true. For that continued and often dedicated payment period, you have absolutely nothing tangible to show for it. Therefore, it literally means nothing.
Affordability looks at incoming and outgoing money, nothing more.
Your rent will be taken into an affordability calculator, but it will be assumed that you won't be renting and paying your mortgage at the same time, so for the most part rent (on your primary residence) won't make a huge difference to affordability.
Because most banks don't like people who are essentially setting fire to money just so they don't have to live with their parents.
Joking aside though, this is technically true. For that continued and often dedicated payment period, you have absolutely nothing tangible to show for it. Therefore, it literally means nothing.
Lol. Nothing to show for it except a roof over your head, right?
You mean someone else's roof over your head, right?
This - rent is the one expense that will stop once you get a mortgage so on forward looking basis won't be considered.
So?
To say you're setting fire to money just so you don't have to live with your parents is wrong.
Renting enabled me to have a roof over my head, in an area where I could enjoy decent employment, which oddly enough played a large part in me saving up the deposit for a home I now own.
Sure, the banks might not take it into account, but to say renting is essentially setting fire to money is ridiculous.
But to say "there is nothing to show for it" is 100% true. It's money that has no residual value, if the landlord shuts up shop or you suddenly can't afford to rent the property, you have literally nothing, no equity to show for all that outlay.
Yes, renting might have been "useful" to you, but it certainly didn't leave you with anything at the end of it. It did however help with the landlord's equity
Yes, renting might have been "useful" to you, but it certainly didn't leave you with anything at the end of it. It did however help with the landlord's equity
Thats why as I stated in another post that people in thier late 40s onwards would have been far luckier in house purchase and probably cannot believe their luck.But to say "there is nothing to show for it" is 100% true. It's money that has no residual value, if the landlord shuts up shop or you suddenly can't afford to rent the property, you have literally nothing, no equity to show for all that outlay.
Yes, renting might have been "useful" to you, but it certainly didn't leave you with anything at the end of it. It did however help with the landlord's equity
A great unjustice has been dond on the younger generation who have very little chance of purchasing a house.
For the record; I am in my 50s and own my home. But I feel sick to see young people having to pay rent and not have equity.
well it sort of is if you pay it late... and the OP does raise a valid point, rent payment history perhaps could be worth looking at when modelling credit risk
I think this could change in future as banks are continually looking at new ways to assess risk
I looked into this when I was buying a house through April/May and I did find a company which was being set up which would help solve this. Unfortunately I forget the name, but in effect the landlord would sign up to them, you pay the rent to the company who would then forward it to the landlord and this would then show on your credit file every month.
Completely useless for me now but definitely worth looking out for in the future.
Completely useless for me now but definitely worth looking out for in the future.
Soldato
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^^ This sounds like a letting agency, does that not count
A building society will count regular savings especially if it was with them, lots of them have higher interest available if you absolutely always deposit and save an amount with them. Since you have to accumulate a deposit its a good idea
A building society will count regular savings especially if it was with them, lots of them have higher interest available if you absolutely always deposit and save an amount with them. Since you have to accumulate a deposit its a good idea