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Your First Home: Everything You Need to Know
Buying a home is one of the key milestones in life and there is nothing more thrilling than moving into your dream property.
As a first-time buyer taking those first steps on the property ladder, it is likely you will need a mortgage to help you achieve your aim.
Finding the right mortgage that suits your individual needs can be daunting with so many options to choose from. As your personal mortgage adviser, we are here to guide you through the ever-changing mortgage market.
Whether you are looking for a fixed rate or a flexible mortgage, we can provide specialist advice covering the whole of the mortgage market.
Affordability is at the heart of all mortgage needs, and we can provide you with a budget plan to help decide your borrowing capabilities.
For your FREE mortgage consultation call 07568 091968 or email lloyd@lprmortgages.co.uk
How much can I actually borrow?
The amount you are allowed to borrow on a mortgage is determined by a number of factors, and each lender have their own very particular variations. That is why it is so important to talk to an independent mortgage adviser who know the ins and outs of each lenders criteria.
Your income, whether employed or self employed will play an important part in the affordability calculation, but it’s not the only thing. All credit commitments will be considered including car finance payments as well as monthly HP or loan payments to banks and other institutions. If you have children or other financial dependents, these must also be taken into account as will your credit history.
For an accurate indicator of how much you can borrow, please contact us here for a free, no obligation and confidential conversation.
Explaining deposit schemes
You generally need a mortgage deposit of at least 5% to 10% of the property’s price, but larger deposits (like 20% or more) secure better interest rates and deals by lowering your loan-to-value (LTV) ratio, with 40% LTV often getting the most competitive rates; you can sometimes find 100% (no deposit) mortgages, but these are rarer and often require a guarantor or specific schemes.
The "Hidden" Costs of Buying Your First Home
There really should be no hidden costs when it comes to buying a house and arranging a mortgage. As experienced advisers we can walk you through the mortgage journey from application to completion and make you aware of all costs along the way.
Here are some to bare in mind:
Survey/Valuation fees: The lender you arrange your mortgage through will need to survey the house you are buying and may charge a fee for this. There are a number of products where a “free” basic lenders valuation is part of the mortgage deal. It is worth noting that these reports are for the lenders benefit, not yours as the buyer and therefore you may wish to seek out your own independent survey/valuation.
Lender’s arrangement fee: The lender may charge an arrangement fee (sometimes known as a product fee) for having a particular deal. This can range from anything between £495 and £1500. Most lenders allow this fee to be added to the mortgage itself, but this means paying interest on the new higher amount. As part of any conversation we have with our clients, we would always show you the difference between those mortgages that may have a lower rate but with an arrangement fee, and those mortgages that may have a slightly higher rates, but perhaps a reduced fee or no fee at all. The cheapest rate isn’t always the most cost effective.
Solicitors fee: When buying a property, it is necessary to involve a conveyancer, and these must belong to the panel of the lender of choice. In other words, if a solicitor is not on the panel of the lender, then either a new solicitor needs to be allocated, or a new lender needs to be found. The total bill from a conveyancer/solicitor will include a whole host of transactional fees including search fees, land registry charges, ID checks, not forgetting the firms’ fees themselves and potentially stamp duty. As experienced professionals within the property market, we can assist you with understanding and breaking down these fees and discussing when they are due to be paid.
From AIP to Completion: A Step-by-Step Timeline
AIP stands for “Agreement In Principle” and is the pre-emptive checks we do for our clients prior to them finding a property to buy. There is no charge for this and there is no tie in or obligation to use the specific lender of choice. However, the AIP is extremely useful for putting you in the strongest possible buying position.
However, we are getting ahead of ourselves. Before we even entertain obtaining an AIP we would get to know you as a client first. Understanding your needs and wants, discovering your mortgage preferences and your affordable budget. All of this is done through a confidential fact finding process.
This enables us to accurately calculate how much you can borrow and how much you can afford to pay on a monthly basis to your mortgage and protection needs.
Once happy to move on, we would then look at sourcing the entire mortgage market and begin to filter down to the specific mortgage lender and product that provides you with exactly what you are looking for.
The AIP will not only provide you with the peace of mind that a lender has suggested they would be happy to lend you the relevant amount of mortgage, it will also become an important part of the “offering” process when you start viewing houses with estate agents.
It is worth noting at this stage that you are not under any obligation with any estate agent to arrange your mortgage through their chosen mortgage advisers. You are in control of this decision, not them. If you wish to talk to other brokers that is 100% fine, but please do not ever feel that you “have” to discuss your finances with anyone else.
Having had an offer accepted on your chosen property, then we would look to formally apply for the mortgage. Remember, up until this point you have not applied for a mortgage, rather you have just had an indication from a lender as to the amount you could borrow. The mortgage application will have been made all the more streamlined as we, as your personal advisers, will have already requested from you all the necessary paperwork to package the application.
Documentation such as:
- Passports
Driving Licence - Last 4 months payslips and P.60
- Last 4 months bank statements
- Last 3 months credit card statements
- Evidence of deposit
- Details of credit commitments
As you can see, there is a lot involved within the mortgage process and is another reason why we can add value to your house buying journey, by navigating you through the entire process. Part of the application process is getting the house valued. The lender will want to do this for their own benefit, but you may wish to action your own independent valuation/survey.
On receipt of the valuation and assuming all is well, it is then that you can expect the mortgage offer. This document will put in writing the exact nature of the deal you have applied for. Detailing the rate, the borrowing and the terms and conditions. We will be on hand to answer any questions you may have on this important document and a copy will be sent your solicitor, whom you will have instructed at the same time as the mortgage application.
Running parallel to the mortgage application, the solicitor will be performing all the legal work required for the purchase and once they receive the mortgage offer, they will look to liaise with you as to when you want to exchange contacts. Up until the date of exchange, you are not tied into anything at all and if necessary, you could withdraw from the purchase. It is only once exchange has taken place that you are committing to the purchase and the vendor (the owner of the property) is committing to sell it to you.
Following completion is the date you have been waiting for…the completion date. This is the date you receive the keys to your new home. It is also the date that your mortgage will commence.
Once you have completed we would love to keep in touch with you throughout the mortgage and be on hand to answer any questions you may have as they crop up. It may be that you want to discuss how to make overpayments. Or you may be looking to move house again sooner that originally intended. Whatever your needs, we will be here to help
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