Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
Buying your first home?
First time buyer or moving home, in many ways it is the same process. Some lenders will impose restrictions on the income multiples they will allow first time buyers, but many don’t.
As a first time buyer, you do have advantages over a home mover such as the fact you are chain free, which can help provide the vendor some flexibility on completion dates as they themselves may in turn be in a property chain. Sometimes it is about being a strong and flexible buyer rather than the highest offer.
However many first time buyers will often have a smaller deposit and as they are looking to borrow a higher loan to value, it is important to ensure the correct lender is selected as the sanctioned loan amount and rate can vary considerably.
Having a chat with your own bank can be a starting point for many, but given the number of lenders in the market place, it can be unlikely your own bank offers you suitable criteria and/or the most appropriate product. And remember any Decision in Principle (DIP) is really an invitation for a Full Mortgage Application and so may not convert to a mortgage offer based on the full facts & actual supplied documents. The key is not getting a DIP, but a mortgage offer!
So rather than spending time visiting high street lenders and perhaps having unnecessary credit checks carried out, we strongly suggest this time is invested in speaking to one of our qualified mortgage advisors who can provide the required assistance. Max Mortgages is a great starting place. Often with mortgage advisors, it is not a question of whether they have access to the right product, but whether they have sufficient experience and knowledge to identify it. We offer a whole of market proposition and please do have a look at our Residential & Repayment Calculators.
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Thinking of buying a home?
It is always best to speak to a mortgage advisor about putting your affairs in order even if you feel you are some months away from making any offer. The things to bear in mind when you are considering making a mortgage application:
- Do not have unnecessary credit checks carried out
- Avoid taking additional borrowing / financial arrangements
- Repay any debts/loans/cards that you are intending to pay as soon as possible. It can take several weeks for the credit agency records to update
- If you do not have any loan/credit card arrangements, it may be worth applying for a credit card that you will regularly use and fully repay each month. No credit history itself can be a issue
- Make sure all your documentation has your correct name and current address.
- Ensure your IDs/VISAs are valid at the time of application
- Lenders may request last 3 months bank statements, so do ensure your income/expenditure is a true reflection of your circumstances
- Changing jobs or income structure just before making a mortgage application
- Start gathering your deposit monies as lenders will need proof
- Feel your income is not enough? Have a chat with family. Gifted deposit and guarantor/joint borrower options may help
Deposit Concerns?
The deposit can be from your own savings and/or a gift from family members. You can purchase a property with little as 5% deposit, but if a family member is able to help increase that, then it could mean a larger mortgage and a lower borrowing interest rate. Family members generally need to be close family such as siblings, children, parents & grandparents. It has to be a gift as any loan you take to help with the purchase may itself have a negative impact on the mortgage amount itself.
Of course there is also the option of the government Help to Buy scheme that can contribute 20% (40% with London Help to Buy) towards the purchase price. The government will take an equity stake in the property, but your 5% deposit may now become 25% allowing you to increase your budget, open up more lenders and secure a better interest rate. You are not restricted to 5% and can still also utilise a gifted contribution. This is available to first time buyers only. Please contact us for further info or visit the help to buy website www.helptobuy.gov.uk. Remember this is generally available to new builds and the developer has to be a member of the scheme (Click here for Scheme Rules Guidance). In future years you can then for example remortgage your property and repay the government loan and totally own your home.
Shared Ownership is also another option where you buy a percentage of the property typically 25-75% and pay rent to the housing association on the remaining element. These are not always new builds and you can ‘staircase’ whereby you have the option if you wish to buy the remaining percentage as your circumstances allow. Again as these are government incentives (Click here for more info) to help non-homeowners get on the property market, there are some restrictions such maximum household income of £80,000pa (£90,000 in London).
For obvious reasons government incentives for home ownerwhip are not available to those looking to buy additional or investment properties.
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