When you are buying your first home there is so much to think about, from knowing how much you can borrow, what type of mortgage is right for you and how knowing how much you will need for a deposit. Our first time buyers guide from our expert mortgage advisors, can help you every step of the way. Buying your first home with Expert Mortgages makes a seemingly difficult process seem simple.
We’ll show you each step to buying your first home, including how much deposit you may need, types of mortgages available and what happens when you apply for a mortgage with us.
Lenders have established guidelines for how to calculate how much you can borrow. Although this might vary between lenders, most will consider these details.
Income: All wages, pensions and investments, bonuses, commissions, benefits, or maintenance payments you receive.
Expenses: Essential expenses such as food, travel, childcare and holidays, as well as non-essential expenditures such as vacations and leisure activities.
Debt: Existing credit agreements such as credit cards or overdrafts, or loans.
Deposit: The amount you have saved for a lump sum to be used as a mortgage deposit.
Employment status: Whether you are employed full-time, part-time, self-employed, unemployed, or retired.
Credit history: This includes your credit score, whether you have declared bankruptcy or have had any county court judgements (CCJs), or individual voluntary arrangements.
If you don’t know how much you can borrow, we can help.
Most people need to put down a deposit when they apply for a mortgage. The size of the deposit will vary depending on the lender and the loan-to-value ratio, but it is typically between 5% and 20% of the purchase price. There are several reasons why lenders require a deposit:
It shows that you are serious about buying the property and are willing to put your own money at risk.
It acts as a cushion against any negative changes in the value of the property.
A larger deposit will usually result in a lower interest rate, which can save you thousands of pounds over the term of the loan.
For many people, saving up for a deposit can be a challenge. However, there are several ways to speed up the process, such as using a gifted deposit or taking out a lifetime ISA. With some careful planning, it is possible to buy your dream home sooner than you think.
A mortgage in principle (also known as an agreement in principle or a decision in principle) is an offer of a mortgage from a lender, based on an assessment of your financial situation. It’s not a firm offer, but it gives you an idea of how much you could borrow and is based on an initial affordability assessment.
Once you have a mortgage in principle, you’ll know how much you could afford to borrow from that particular lender. This can make house-hunting more efficient as you’ll only look for properties within your price range.
It’s worth bearing in mind that having a mortgage in principle doesn’t guarantee you’ll get the mortgage when you apply for it. The mortgage lender will carry out further checks when you make a formal application, including a credit check. If your circumstances have changed or your credit score has deteriorated since obtaining the mortgage in principle, this could affect the decision.
Mortgage applications can be a daunting process, with paperwork and forms to fill out. However, we can help to make the process easier. We are experienced professionals who understand the ins and outs of applying for a mortgage. We can guide you through the process and help you to understand the documents you need to provide. In addition, we will offer support and advice throughout the application process. All lenders vary, but normally we will require the following for the application:
/ Proof of ID
/ Proof of income (Payslips or tax return)
/ Bank statements
/ Proof of deposit
It’s worth noting that this is an extremely important stage to get right, as incorrect information, wrong documents or applying for the wrong mortgage could result in your application being rejected, which could incur a significant delay on your journey to owning your own home.
Speaking to an experienced and knowledgeable broker, who can provide advice and who can check your details and documents to ensure they are correct will help prevent that happening.
Mortgage offers are usually valid for six months, although this can vary depending on the lender. Once you’ve received an offer, you’ll need to start the conveyancing process. This is when your solicitor or conveyancer will carry out all the legal work associated with buying a property. They’ll likely arrange for a survey to be carried out on the property.
Sometimes, if information on the application doesn’t match records a lender has access to, or the documents are not acceptable, your application will be declined. This could be for a number of reasons such as missing or late payments, having an account in arrears within six years and making too many applications recently which has resulted on multiple hard searches being recorded against your report. There can also be mistakes made during application process such as incorrect addresses provided.
You can reduce the chance of this happening by speaking to an expert and experienced broker who can guide you through the process.
When you exchange contracts, you are legally committed to buying the property. At exchange, both you and the seller sign the contract and agree on a completion date. You will also pay a deposit (usually 10% of the purchase price). Once exchange has happened, the transaction is legally binding and cannot be cancelled. After exchange, your conveyancer or solicitor will prepare for completion. They will check that all conditions in the contract have been met. A few days before or on completion, they will give the keys to your new home to their agent or solicitor.
On completion day, the balance of the purchase price is paid over, and you can collect the keys to your new home from their estate agent or solicitor. They will also notify the Land Registry of the change in ownership. And that’s it! You are now the legal owner of your new home.
We’re here to help you through the process of finding a new mortgage, no matter what stage you’re at! Give us call.
Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
Expert Mortgages is a trading name of Expert Mortgages Herts & Cambs Ltd which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.
Expert Mortgages Herts & Cambs Ltd. Registered Office Address: Hardcastle Burton, Market Hill, Royston, United Kingdom, SG8 9JN. Registered in England Number: 13095386.
