Are you buying your first house? It can be a very nerve-wracking experience, but also equally exciting. With that being said, going through the mortgage process may not be as exciting.
You’ll be classified as a first-time buyer if you are purchasing your first residential property.
Before your mortgage is confirmed, the lender will need to assess your personal and financial circumstances; this is to check you’re financially reliable enough to commit to such a long-term loan.
Today, there are a number of schemes designed to help first-timers get into the property ladder. Among the newest is the First Homes Scheme – which offers a 30% discount on the market value of new-build homes – but only to eligible first-time buyers, with a priority for key workers and army veterans.
In addition, many mortgage lenders will lend to any home buyer who may only have a 5% deposit. This is under the 95% mortgage scheme where the government has agreed to underwrite a part of the loan. Eligibility criteria are in place. For example, it is only available on property purchases worth up to £600,000. But this scheme could help thousands of people into homeownership.
What will lenders look for…
In order to determine how much you can borrow, a mortgage lender will review your income and outgoings, including debts, household bills, childcare, and general living expenses. They will also examine your credit history to determine whether you are a reliable borrower.
Most mortgage lenders will offer a maximum loan-to-value (LTV) or percentage of the property’s value. If, for example, you want to buy a £200,000 property on an 85% LTV mortgage, you’ll need a 15% deposit, which comes to £30,000.
Before applying for your first mortgage you will typically need to have done the following:
- Check your credit score – You can take action to help boost your score should you need to
- Save up some money for a deposit – The greater the cash savings you can put down towards your first home purchase the less you will need to borrow through a mortgage.
- Talk to a Mortgage Adviser – From this, you can work out how much you borrow, how much deposit you need, and what sort of property prices you can afford in your area – ideally before you start house hunting
One of the best ways to prepare for your mortgage search is to improve your credit score. Here are some ways to do that:
- Pay off all debt – Try to make sure you’re debt-free when it comes to applying for a mortgage as debts impact your credit score.
- Pay your bills on time – Keep track of all bills and make sure they’re regularly paid on the agreed date. One way to do this is to set up direct debits for each of your bills, so you won’t need to remind yourself to pay each time. All bill payments are reviewed for your credit score, including internet subscriptions and phone contracts.
- Register on the electoral roll – Lenders use information in your Electoral Roll to confirm your name and address history. Once you’re registered, it may take a while for this information to appear on your credit report, but it usually won’t take longer than a month
- Live in one home for a long time – when you have lived in a certain house for a while it can have a positive impact on your credit score. it shows that you can manage rent and bills, and are paying them on time.
Should I use a Mortgage Adviser when taking out a mortgage?
Getting a mortgage is a huge financial decision, we strongly advise getting in touch with a mortgage adviser at the start of your mortgage journey whether it’s your first mortgage or you’re looking to re-mortgage. It will save you a lot of time and effort in the long run.
A mortgage adviser, will search the mortgage market on your behalf, compare deals, and guide you through the application process.
Some brokers even have access to exclusive deals only available through their business, so you might get more choice than you would get if you decide to go it alone.
Here at Peter Lane & Partners, we have a dedicated mortgage adviser to help our clients on their home buying journey.
Find out more by getting in touch with our team today.
Kimbolton – 01480 860400
Huntingdon – 01480 414800
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