Being a first time buyer isn’t easy, there are lots of things you don’t know and sometimes it can feel like nobody you deal with has your best interests at heart. We are here to change that, as our client you are the centre of our world and unless we make you happy we can’t stay in business. You can check out our testimonials to see what people think of us, helping first time buyers is (at least on the mortgage side of the business) what we do best. Below are a few tips to help you along the way.
1. Find out how much you can borrow
Your current income (which includes commission, bonuses, overtime – i.e. any additional money that is subject to tax) will determine how much you can borrow. Some lenders calculate borrowing ability by a straightforward multiple of your income while others will work out your net disposable income and then allow you borrow a percentage of that. There are many variables involved in calculating your approval amount, your best bet is to apply for Approval In Principle through your broker.
100% finance has been effectively removed from the market, it was introduced by several leading mortgage lenders in 2005 and was stopped in 2008. Some banks will still consider 100% for certain clients (generally you must be a doctor/dentist etc.), however the criteria is so restrictive that its easier to take the approach of it not being available at all.
2. Get Approved
Once you complete the quick online application, we will get back to you within 24 hours (Mon-Fri), normally it is a good idea to meet with us and go through your paperwork and details although we can also do this remotely, we then show your case to different lenders giving you access to a large number of banks in one transaction, once we get approvals in principle we will call you back letting you know your position with different banks. An Approval in Principle states how much you could borrow (subject to the usual terms and conditions being met). This gives you the confidence to look at properties within your price range.
3. After you find your dream home
Once you have found a property that matches your criteria and is within your price range, please let us know. You will have to pay a deposit on the property to the selling agent. The deposit is normally 10% but, at this stage, you won’t have to pay over the full 10% but will have to put down some money to secure your interest. At this point, you should inform your solicitor of the selling price and the property’s address.
We will meet with you at our offices to complete a full mortgage application, you’ll need submit your paperwork at this stage (see application checklist in ‘quick guides & forms’). Part of this process involves disclosure of personal information such as previous loan history as credit checks are carried out by a potential lender at the time of application.
We also now arrange for an approved valuer to carry out a valuation required by your lender as part of the loan process. If you are buying off plans or if you are buying a house in need of substantial repair, it is likely a second valuation will be required before your loan cheque will issue.
If you are buying a second hand property, you may wish to have a structural survey also carried out. This will give you peace of mind regarding the current condition of your property. Be aware that some lenders may insist on a structural survey for older properties.
4. When your loan is formally approved
Once the valuer completes the valuation, it is returned to us. This is needed so the lender can be confident of the market value of the property that they are lending on.
We forward the valuation to the lender along with any outstanding information they may require and request the lender to issue your formal loan offer (also known as Letter of Offer) to us and to your solicitor.
The loan offer is valid, depending on the lender for 3-12 months from the date it is issued.
5. Procedure at signing of contracts
Once your solicitor is satisfied with the title to the property (i.e. that ownership of the property is clear and can be transferred to you) you now sign contracts. The balance of the deposit (normally 10% of the purchase price) is usually required at this point. When you exchange unconditional contracts, the sale of the property is irrevocable. If you decide after this stage not to buy the property, you will lose your deposit so be very sure you’re happy with everything before signing.
On your instruction, we will organise your life cover (known as Mortgage Protection). You will also need to arrange a Buildings Insurance policy These are both conditions stated on your loan offer and are necessary (in most cases) before the lender will release the funds to your solicitor. We have access to a wide range of life assurance companies so we can obtain the best selection of policies and premiums on your behalf.
6. Your cheque issues and you get get your keys!
Once all the loan conditions on your loan offer have been satisfied, you are ready to close.
To close, we have to submit both Insurance policies (for life and property), which must be in force. Your solicitor will submit the legal papers to the lender and request a cheque. On completion, the mortgage cheque is paid over to the seller’s solicitor and Stamp Duty (if any) is also paid now along with your solicitor’s fee and outlay.
Your solicitor will then hand over the keys of your new home. You are now the proud owner and can move in!!!!