SEVENTY-EIGHT-PER-CENT of those looking to buy a house in Wales in the year do not know what the Government’s Mortgage Market Review (MMR) is, or how it may affect them, according to a report commissioned by Experian, the global information services company.

The study also finds that nationally, of those that have heard of the MRR:

• 43% think the introduction of the MMR means they can apply with smaller deposits  –  when larger deposits to make mortgage repayments more manageable, are likely to be needed; and

• 19% believe lenders will have relaxed their lending criteria after April 26 2014 – when affordability checks will in fact become much more stringent

The MMR, which aims to make mortgage lending more responsible and stable was introduced on April 26. However, it does mean that those hoping to borrow to purchase a property will need to show they have considered how they will be able to manage their repayments now and into the future should interest rates rise.

With more than 10% of Britons surveyed saying that they plan to buy a property this year, Experian has launched a dedicated online resource Mortgage Matters, www.experian.co.uk/mortgages, which contains lots of guides, articles and videos to help people make their property dreams a reality. Experian and This Is Money are also giving people the chance to win a £20,000 deposit to help make these property dreams a reality!*

Peter Turner, Managing Director, Experian Consumer Services, UK & Ireland, said: “It is clear that many aspiring homeowners are in a great muddle about the MMR and many more are unaware of the amount of preparation that should be invested in getting your finances and credit history in order before you make any mortgage application. The Mortgage Matters website was designed to help people navigate the mortgage application journey and this amazing prize could really help make a dream come true for one first time buyer.”

For those who have dreams of owning a home, in order to stand the best chance of securing a mortgage – and to get one with the best interest rate – homebuyers need to get their finances in the best possible shape. However, it appears very few potential buyers are doing that.

A fifth (19%) don’t plan on preparing their finances before their mortgage application, while another fifth (18%) only plan on preparing a month prior to their application. Moreover, fewer than one in four (23%) have checked their credit score in the last six months, which would help provide a clear picture of their financial situation and how they are likely to be viewed by lenders.

Of those looking to buy a property:

• Only a fifth plan to make a clear six-month budget;

• A quarter (26%) plan to clear outstanding debt;

• A further 15% plan to pay down any outstanding credit;

• Only a third plan on cutting back on luxuries in the lead up to their application.

Peter Turner continued: “Time spent preparing your finances now will pay dividends in the future. We’d advise potential homebuyers to look at their financial situation as soon as they make the decision to look for a home, and not just before they apply for a mortgage. This will give you the chance to make any improvements necessary and get accepted – and at the best rates, too.

Here are some simple tips from Experian CreditExpert to help you prepare for a mortgage application after the Mortgage Market Review:

1. Know your budget. As soon as you decide to look for a property, scrutinise your last few months’ outgoings carefully to understand your spending habits. Are there things you could do without to finish each month with cash in the bank?

2. Know what you can really afford. Visit a broker or use an online mortgage calculator to work out your likely repayments. Importantly, play with the interest rate settings to see if you could afford repayments if rates rise by 1%, 2% or more.

3. Make sure your credit report is up to date. As well as checking your outgoings, you should also check your credit report, which includes a record of all your borrowing over the last six years. Ensure everything is accurate and up-to-date.

4. Does your Experian Credit Score need work? The Experian Credit Score is a guide to help you understand how a lender might score your credit worthiness. If it’s lower than you expected, ask the experts for help and ensure your credit report paints the best picture possible before you make your application.

5. Build good behaviours. Finally, from now until your application, try to appear like an ideal mortgage borrower. Show you can make it through several months with a slight surplus. Don’t take out additional borrowing and try to demonstrate you can comfortably manage any outstanding credit commitments you have.