Buying your first home can be a stressful time, but securing a mortgage doesn’t need to be a daunting task for a First-Time buyer. Here, we discuss the mortgage process from start to finish, breaking it down into simple steps from initial budgeting to your final application. When the stress is taken out of finding a mortgage, you can focus on finding your ideal home instead.
Set your budget
It’s important to work out what you can afford before you begin your property search. The minimum deposit required is 5 per cent of the property’s total price – you can use online calculators to help you work out how much you could borrow and your monthly repayments based on your income.
You’ll need to calculate how much you can afford to pay each month, factoring in both a mortgage and maintenance costs.
As a First-Time buyer, you should also work other financial factors such as stamp duty which can determine how much you can afford to spend on a property. Mortgage fees, valuation fees and solicitor fees should be a factor in your calculations, too.
Improve your credit score
Lenders will assess your financial situation to see if you’re a good prospect to lend money to. The better your credit score – which indicates your financial situation – the more likely you are to secure a mortgage.
There are things you can do to improve your credit score, such as paying off outstanding debts, keeping your credit utilisation low, paying bills on time and securing a regular income. Getting on the electoral role can also give your credit score a boost. For a First-Time buyer a good credit score will reassure lenders that you can afford to keep up with your mortgage repayments.
Finding the best mortgage
When you’ve calculated what you are able to afford, visiting a mortgage adviser should be your next step. They will use their unrivalled industry knowledge to help you find the best mortgage for your circumstances. There are several types of mortgages to choose from: fixed-rate, tracker or discount mortgages are the main three.
Your mortgage adviser will assess your financial situation and recommend the best option for you. Advisers can also have access to exclusive deals from lenders that you won’t find on the high-street.
Fill in the paperwork
If you use a mortgage adviser, they will apply for a mortgage on your behalf. You’ll need to provide identification, proof of address, employment details, utility bills, credit card statement and past bank statements for your adviser to complete your application.
They will also require evidence of your outgoing costs, such as loan repayments, travel costs, living costs, childcare and car finance. Your mortgage lender will assess all of this when deciding if you can afford a mortgage.
Mortgage decision in principle
If your application is successful and a lender agrees to give you a mortgage, you can get a mortgage decision in principle if you are yet to find the right home. These are typically valid for six to nine months and can speed up the property buying process when the time comes. Your mortgage adviser will secure this for you and ensure everything is in place for a swift move.
Formally apply for your first mortgage
When you find your perfect property and have had your offer accepted, your adviser will submit a formal mortgage application on your behalf. Mortgage offers are typically valid for six months and will arrive 18 to 40 days after the application is submitted. After your formal offer arrives, your solicitor will schedule the payment for your mortgage funds from your lender to the previous owner of your property to complete the sale.
First-time buyer schemes
There are a number of government schemes available to help a first-time buyer get on the property ladder. The Help to Buy Equity Loan Scheme allows you to borrow 20 per cent of the purchase price of a newbuild home interest free for the first five years.
The Shared Ownership Scheme enables you to buy a percentage of a property whilst renting the rest from the housing association.
The Right to Buy Scheme allows you to buy your rented council property for a discounted price.
Choice Mortgage Solutions provide independent mortgage advice for buyers along the south coast of Hampshire and West Sussex. With years of experience under their belts, our advisers can help you navigate the complex mortgage market and provide access to exclusive deals you won’t find on the high street. Get in touch today to discuss your first mortgage with a member of the team.