Apologies in advance if this is not the correct place for the question.
I am 30 and I’ll be the first to admit that I’m still fairly naïve to most things banking. I usually just live paycheck to paycheck. I have a small savings pot to start saving for the future (Should have done this a lot sooner). My concern is that if I ever require to speak to the bank manager in future about applying for a mortgage would being a full current account customer with Monzo hinder me getting one?
Would my lack of being a customer with a standard UK bank draw up any warning signs? Are there any other drawbacks to switching my banking fully to Monzo?
You don’t have to have an account with a bank to get a mortgage with them, or indeed get one from a bank - I got a much better deal from our local building society, and my own bank were way down the list on the comparison tables.
Credit checks are much more complex than which bank you have… they do a full affordability test involving everything you’ve spent for the last year, get references from your employer, all sorts of stuff - I found it quite exhausting.
There are no drawbacks other than depositing cash currently. Everything else is pretty much there. As for your concern with a mortgage, it makes no difference where you bank as to which mortgage you can get.
Though as been said above, it is worth shopping around. We used a financial advisor who had a wide range of lenders to choose from to get the best deal.
I personally would beg to differ. I find their articles sneaky and “sensationalist” in a way - they promote tactics that always treat companies like the “big bad wolf”. Personal opinion of course.
Money Saving Expert was bought by MoneySupermarket for £87m. They are also a business who presents deals for customers from different suppliers and they get a fee for each one they promote and sell. Every business needs a profit to survive so of course sometimes they will not always promote the best deal for the customer. There are also businesses that don’t advertise via these websites and pass those savings on to their customers.
Also a mortgage may mean death pledge but I’d rather get one and be sure of a roof over my head in the long term than rent for the rest of my life and have nothing to show for it.
It’s been a hostile day on some threads today. I’m quite drained from it.
To be honest I don’t see why a financial institution (or any for-profit business) can’t be your friend.
As an example, I’m doing business with my network provider, I pay them money, they provide me bandwidth in exchange, we both have our own interests but I don’t see why we aren’t friends.
The fact that most existing financial institutions are shady doesn’t mean a new challenger can’t turn things around and actually do business fairly and transparently and actually be your friend. And yes they can (and should) make money off you but as long as it’s done in a way where both parties agree I don’t see the problem. My network provider is making money off me and has to pay their engineer’s pay checks and their CEO’s holidays but I don’t see anything bad in that as they’re providing me the service I’ve agreed to pay for.
When it comes to mortgage applications specifically it should be noted that for some lenders the absence of paper statements may be an issue. This is unlikely, but I think it should be noted.
The other thing for mortgages in particular: definitely, when it comes to it, go via a mortgage broker. Many are free, others charge small fees, but they are worth it to compare the market for you.
Finally, if you ever need a mortgage be aware that likely won’t get a mortgage if you have never had credit before. A mortgage lender wants to see that you can reliably repay a credit, and if you never had any credit they can’t see that. Think about getting a credit card and using it regularly. But always pay off in full every month.
And finally finally, latest a year before you apply for your mortgage, but ideally now, look into your credit report and keep an eye in it regularly, to make sure it all stacks up.
I do most of the above now. I’ve taken out a small loan that I’m in the last year of paying back and I check ClearScore regularly.
Good point about the paper statements, hopefully Monzo will have a facility where you can download statements and print them off but most banks are going “paperless” now.
A small loan is good. A credit card is better, though. An outstanding loan balance will reduce your mortgage affordability. Also, loans usually cost interest (money)
With a credit card:
don’t use it for 3 months (it takes a while for credit referencing agencies to update their reports and report that the balance is 0) before you apply for your mortgage. Thus you have no outstanding credit, thus no regular monthly payments, thus better affordability.
it will still affect your credit rating somewhat, even if you don’t make use of it all, because the credit is available to you, whether you use it or not.
there is usually no interest if you pay off the whole balance on time. Thus, credit cards are typically free.
I’ve never, ever looked into a credit report in 30 years of banking and don’t see that there’s any value in it at all. The banks have taken their own decision on me whenever I’ve applied for something. Yet so many people seem absolutely obsessed with them. In part I want to sneer just because the attitude doesn’t match my world view but perhaps I should just look a bit bewildered?
What’s going on that I don’t understand? Is this just an attempt to ‘game the banking system’? Is there some super-secret thing going on here or is this just people throwing time and money away at some nebulous ‘worthiness’ index?
I think you have a point. I think for large numbers of people that’s probably just fine. Most people should sort of know what’s in their report, as they applied for the respective credit, and made (or not made) the required payments anyway.
The reason why I regularly check my credit report is, because no one is perfect.
Identify fraud is rampant (no doubt the fact that we share our whole life with the whole world nowadays plays a part in that, as do the massive amount of data breaches happening all the time). I had a friend who had this happen. Someone had taken out credit in his name, and obviously not payed it back. He didn’t know until he was declined for credit, because from the view of the bank he had defaulted on that credit that he didn’t even know existed. That took him ages to sort out.
Another thing that happened to me (and I chronicled that elsewhere in this community): my phone provider simply incorrectly reported a non payment (they hadn’t collected a direct debit due to their fault). Because I was monitoring my credit report, I noticed and contacted the provider. After some back and forth they corrected my report. I did happen to apply for a mortgage shortly afterwards, and while I have no proof that my application would have been denied if the default had still been on my report, I certainly think it wouldn’t have helped.
So, monitoring your credit report is (in my opinion) mostly helpful to correct errors, and to help with the clean up after identity fraud happened.
Well, yes, if you pay for it. There are however nowadays plenty of free services that allow you to monitor your report. See the link above. Definitely don’t pay for it!
Apparently it differs. From what my mortgage advisor told me, Barclays did the same, while another (virgin money, I think) did not. Either way, it probably doesn’t hurt to have a 0 balance. Also, this is another reason to get a mortgage advisor / broker: they know these things, and massively increase your chance of acceptance, as they’ll filter out those providers who are unlikely to accept you (e.g. due to outstanding credit card balances)
Whilst this is true, it also isn’t. Mortgage brokers will make commission from you, so they may offer mortgages to you that pay them the best commission. But ultimately you, the customer, don’t pay them.
I’ve been to a mortgage broker for each of my two mortgages and will be back to see him again and again.
