What else should I consider when getting a mortgage for your first home

Ready to purchase your new home? These are some things to consider

Purchasing your first home can be both thrilling and intimidating. Check out these top tips for getting on the property ladder if you’re thinking about buying your first house.

Purchasing your first home is a significant achievement and likely the largest purchase you will ever make, but it can be a complicated and time-consuming process. There’s a lot to think about, from choosing a property with all of the amenities you want to make sure you understand the costs.

Pay Off All Debt and Build an Emergency Fund

Even if your monthly house payment is equal to or less than your current rent, owning a home is expensive—much more so than renting. Since you are responsible for all maintenance and upkeep costs when you own a house, they can quickly add up! So, before you can consider buying your first home, try to become debt-free or at least reduce your debt.

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Save for a deposit

You’ll need to save for a deposit of 5% of the cost of the property you want to purchase before you start looking for a home. Save as much as they can for a deposit to give yourself the best chance of getting a mortgage and get a good rate of interest. Maybe ask your parents for some money to assist with the deposit (if this is an option) to reduce your interest rate. There are also several government-backed savings schemes available, such as the Help to Buy ISA.

Improve your credit score

When saving for a deposit, you can also improve your credit score before applying for a mortgage. To improve your credit score, I recommend getting a credit card at least six months ahead of time and starting to pay it in full every month. This will demonstrate to mortgage lenders that you are a consistent payer. You’ll still need to show lenders proof of your income, so keep your finances in order and cut unnecessary spending ahead of time.

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The starting point is working out how much you can afford on a monthly payment

Until applying for a mortgage, sit down and make a budget. You must ensure that you will borrow enough money to cover the expense of the property and that you will have enough money left over to cover any other expenses and fees. The amount you borrow (and for how long), as well as the interest rate paid, will determine your monthly mortgage payments. Our mortgage calculator will assist you with your calculations. [ADD LINK]

Get the timing right

Many people are worried about whether now is the best time to purchase property because of the coronavirus and Brexit. However, no time is the best time to buy a property because it is a long term investment. Even though we don’t know what the year ahead holds, the housing market has remained solid, and my advice to any first-time buyer is to establish roots and secure a home as soon as possible.

Additional costs

You’ll need to account for some other expenses in addition to the mortgage payments. Surveys, solicitors, stamp duty, mortgage valuation fees, moving expenses, life, critical illness, and buildings insurance are among them. Budgeting for surveys is especially crucial if you’re purchasing an older home. Complete structural surveys can cost a lot of money, but they are well worth the money to point out any current or potential problems with the property.

Location

The location is one of the most important factors to consider when purchasing a home. If you’re buying in an unfamiliar neighbourhood, go at various times of the day to get a feel for the place.

Transport connections, crime rates, schools, traffic, and what’s being developed in the area are all items to keep an eye on.

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Ease of resale

Remember that the first home you buy may not be the last one you buy, so think about its resale value. If it’s been on the market for a long time, it’s a good indication of how sellable it is. Consider why it may not have sold quickly: is it due to a lack of parking, market conditions, or a noisy neighbourhood?

Although property websites may provide some detail, they do not always tell the whole storey. Rightmove doesn’t often tell you how long a property has been on the market or whether another seller has already pulled out of the sale or for what reason.

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For more details, call our Mortgage Saving Experts today.

Find a good agent

Finding the right estate agent will improve the chances of finding your dream home and negotiating a good price. Do your homework and find an estate agent with a proven track record of helping people sell and buy homes, as well as positive feedback.

While many online agents are available, having face-to-face contact with someone who has extensive experience and is intimately familiar with the area can be reassuring.

Ask the right questions

Gather as much knowledge about the property as possible before making an offer. You can get an idea of how popular a property is by asking how many viewings and offers it has received. Estate agents are also required by law to notify you of any unsuccessful transactions and the reasons for the failure. It’s also a good idea to find out what the seller’s future plans are and whether or not there’s a chain involved. If the seller is purchasing another house, find out if it is part of a chain and get a sense of how long the transaction will be.

Always do a second viewing

Second viewings are strongly recommended, especially for first-time buyers. If you’re going to commit to a purchase, it’s important to have a thorough understanding of the property’s potential because you’ll almost always notice stuff you didn’t notice the first time. Pay attention to potential issues like leaks, mould, and sagging roofs, and see if any fixtures and fittings come with the house.

The Required Financial Documentation

Before you apply for a mortgage, make sure you have all of your ducks in a row. This will make the process run far more smoothly. Inadequate paperwork will cause the process to be delayed or even halted entirely, so figure out what you need to bring to the table.

Buying with someone else can be easier

If you don’t think you’ll be able to save enough money to buy a house on your own, you may want to consider buying with someone else. This may increase your chances of getting a good mortgage, particularly if they have a better credit history and a higher income than you. But keep in mind that this is a huge undertaking, so sit down with your partner and discuss what would happen if either of you wished to come off of the mortgage and when.

You shouldn’t chop and change your application

If you’ve begun your mortgage application, don’t fiddle with it or start adjusting numbers because it might cause your property purchase to be delayed. Changing the figures later would require the application to be reassessed, which, while not actually a problem, could cause unnecessary delay.

Get Preapproved for a Mortgage

When you’re sure you’ve saved enough money to cover your deposit and associated costs you are ready to start speaking with one of our mortgage advisers.

Before you begin your home quest, get an Agreement In Principle (AIP) for a mortgage and take the time to obtain an AIP certificate. AIPs demonstrate to sellers that you are a serious buyer, which is an excellent way for first-time homebuyers to gain an advantage in a competitive market.

Your lender will need to take the information you give them and do a credit search to check your eligibility for the mortgage.

Find a Home for Sale in Your Price Range

There are many online firms advertising property but the most predominant is Rightmove. There are others such as online estate agents and Zoopla among others

Make a Competitive Offer (That’s Within Your Budget!)

Assume you’ve found a home you want and can afford. You’re about to make an offer because you’ve already been Agreed in Principle for a mortgage. It can be difficult to know how much to offer if you’re a first-time buyer. Just remember that the first offer is never accepted by the seller so go lower first or if you do not want to mess around just make an offer of the full asking price especially if the property has had lots of interest.

Prepare to apply for your mortgage

Once your offer has been accepted on the property you will need to contact the lender or adviser who is arranging your mortgage to start the application process.

The Bottom Line

Buying a property is one of the most challenging times in people lives and very stressful so ensure you have the best advisers around you to guide you through the buying process.

Ready to Get Started?

The team of experienced mortgage advisers at Mortgage Saving Experts have extensive knowledge of the property market. They can help you with every step of the buying process, from application to completion. To find out more, call us on 01273 738 072.

FAQs

What do banks look at when applying for a mortgage?

Although a select few will be able to purchase a home outright, most of us will need to secure a mortgage from a lender. Lenders look for a good credit background, a low amount of debt, and consistent income while evaluating a mortgage application, among other things.

What are the four things you need to qualify for a mortgage?

Lenders consider many things when determining whether or not to offer you a mortgage: The ability to repay the loan. To ensure that you have the financial resources to take on a mortgage comfortably, lenders look at your wages, work records, assets, and regular debt payments, such as credit card charges and other financial obligations.

What is a credit check?

A credit check is a look at the credit accounts you’ve had in the past. It contains information about your payment history, including missing or late payments, bankruptcies, individual voluntary agreements, and county court judgments. It can remain on your credit report for up to six years.

It’s important to keep in mind that using one of the credit checking tools will leave a “footprint” in the form of an enquiry on your credit report. Your credit score will not be harmed as a result of this.

Will an Agreement in Principle affect my credit score?

Lenders use a credit score to help decide whether you qualify for a mortgage. Lenders use a statistical formula to determine a score that reflects your credit history based on the details on your credit report and the information you provide for your application. Multiple credit reviews performed in a short period of time may have an impact on your credit score ranking. Your Mortgage Adviser at Mortgage Saving Experts will discuss your circumstances and perform affordability calculations before completing an Agreement in Principle so that you don’t have to go through endless credit checks that may damage your credit score. Before we conduct a credit check with a mortgage lender, we will always ask for your permission.

 

What if I have a poor credit score?

We assist clients in obtaining mortgages in a variety of cases. We could have lenders who would accept lending even though you have missed payments or have a County Court Judgement (CCJ). Obtaining a copy of your credit report will assist us in better understanding your situation and obtaining the most competitive mortgage for you. When performing a credit review, most lenders use TransUnion, Experian or Equifax. To obtain your personal file, go to TransUnion, Experian or Equifax.

What is a “footprint”?

A credit check “hard” footprint is a mark on your credit file that indicates that you, a lender, or a credit provider have looked at your file, which typically occurs when you apply for credit.

A “soft” footprint is a query, and some lenders do a soft credit search when applying for an Agreement in Principle which does not affect your credit score nor does it leave a footprint on your credit file, whereas a hard footprint is a credit application such as a mortgage, credit card, or loan.

higher number of hard footprints in your recent credit history will lower your credit score.

How can I make my credit score better?

Lenders are more likely to accept applications if they have a higher credit score. You can increase your credit score in a variety of ways, including:

  • Register to vote by putting your name on the Electorla Role or “Voters Role”
  • Reduce the amount of debt you owe
  • Try to avoid missing payments
  • Check your credit file regularly
  • Don’t make lots of loan applications in a short space of time

Your personal advisor will be able to assist you in obtaining and improving your credit score.

Mortgage Lenders

Want to know more?

For more details, call our Mortgage Saving Experts today.

Want to know more?

Get in touch with of our mortgage saving experts today to find out how we can help.

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