First Time Buyer
Here at Bluebell mortgages we are expert mortgage brokers and have a detailed knowledge of mortgage lenders and first time buyer mortgages. If you are a first time home buyer getting the right mortgage advice is essential, read on for hints/tips and the benefit of our knowledge on the home buying process.
Want to get a foot on the property ladder?
Looking to buy your first home but don’t know where to start?
Is it your first time getting a mortgage?
Where do I start?
Finding out what you can borrow is the obvious answer.
You need to understand your borrowing capacity as well as what your repayments are likely to be.
We’re all different and so are our finances, some of us may be super scrimpers and save every penny and others may enjoy the luxuries in life. Lenders need to understand your lifestyle so that they can work out the size of loan to give you.
Lenders will ask questions to work this out, they will want to know.
What you have coming in through the front door, this can be whether you are.
- Self -employed (most but not all lenders will look at a 2-year average)
- Director or shareholder of a Ltd company.
- Full or part -time
- Paid bonus overtime or commission
Do you pay your debts back on time?
This is your credit rating and credit score, it’s a bit like a mythical beast with many wild rumours doing the rounds.
- Too many checks hurt my score?
- My score is 999 but I have been declined
- I have no credit therefore I am penalised.
Your credit score and credit rating are two different things but the terms are used interchangeably, your credit score is individual to the lender you are looking to borrow your money from. Lenders award points to you for certain traits.
Lender A may have had bad debts from a certain profile of customer in the past for example someone who has only been self-employed for 18 months. If this is the case they will apply a negative weighting to your score, if this is coupled with something else they deem negative such as having a small deposit and not paying a loan back on time you may not hit the desired threshold of points for them to grant you a loan.
A credit report is a very valuable tool when applying for a mortgage; you can download yours for free at the following website www.noddle.co.uk , or register with one of the paid services such as credit expert or Equifax.
Lenders never divulge their credit scoring system mainly as it is computer generated so you never know if you will be accepted or rejected until you try. However, Bluebell Mortgages are an experienced Suffolk based mortgage advisor and have a detailed knowledge of lenders criteria which proves invaluable when knowing who to approach and who to avoid.
Most lenders will lend to age 70 some to 75 and a few beyond, your age matters because it tells the lender how long you will potentially be earning for and therefore able to service your mortgage.
Options do exist for older borrowers who are on a pension income this is covered off in our lifetime mortgages section. http://www.bluebellmortgages.co.uk/services/lifetime-mortgages/
These could be.
- Loans (car, sofa, or holidays etc.)
- Credit cards
- Nursery costs
- Travel costs
- Maintenance (for an ex-partner or children)
- Number of children (the number of mouths you have to feed can impact your borrowing potential, lenders will make an allowance for each child within your affordability) Some lenders do also take child related payments such as child benefit and tax credits to help with this.
Amount of deposit
The amount of money you can put into your property purchase in addition to your mortgage has a bearing on how much a lender will lend you. Generally, the larger your deposit the less risk for the lender and the more they will lend.
As part of our mortgage advice and assessment process we will work out the costs to purchase so that you have an accurate idea of how much deposit you will have available.
Once we have worked out your income, commitments, likely credit score, deposit and how long you can borrow the money for, we can work out the maximum loan size you should be able to obtain.
However just because a lender says you can borrow a certain amount doesn’t mean that you should always go to that level.
The driving factor behind how much you borrow is how much it will cost you to repay per month.
Factors affecting the monthly payment are.
- The Term – how many years you borrow the money over (Your age may determine this)
- The interest % rate that you pay
The term of the loan, how long you want to borrow the money for, will impact on the monthly payment. The longer the term the lower the payment. Lower payments can seem attractive but using the term to lower them means that you are stretching the loan out, the drawback of this is that you end up paying more interest overall.
We understand this could be the first large payment you will have to make, we will always try and find a happy medium for you with a term long enough to make payments affordable, but also as short as we can go to minimise interest.
Once your mortgage is set up we will then diary a review date to coincide with the end of your introductory deal.
As part of our review process (see remortgage section) http://www.bluebellmortgages.co.uk/services/remortgaging/ we will keep one eye on the future and so if you did take a longer term initially to reduce your payments we may suggest shortening your term at this point once you have gotten used to the monthly payment and had a couple of years of pay rises etc. Working this way can reduce or even remove any of the adverse effect of borrowing over an extended term initially.
We have worked with many clients who have taken 10-15 years off their mortgage term and indeed settled their loans way ahead of what they thought possible by using this method.
Ok, now we have your borrowing capacity, costs to buy, deposit and a ball park monthly cost, we now need to get some back up from lenders.
This is where an agreement in principle comes in.
The way it works is as follows.
An agreement in principle is a security blanket for you, based on our assessments; we will identify a lender or number of lenders that will likely fit the bill. We will then assess your criteria and match it with the lender most likely to offer you the best loan for your circumstances. For example, this could be borrowing the maximum amount possible so that you can buy a better home, a lender that is flexible if you have missed one or two credit card payments or who will accept you if you have only been self-employed for 12 months. Every client is different and we have the knowledge to match you with the lender most likely to say yes!
We will need to collect supporting documents to back up your earnings (wage slips, accounts etc.) and bank statements to back up your affordability, commitments and outgoings. We will also verify your identity by taking copies of documents such as passports, driving licences etc.)
Once the likely lender has been identified we will provide them with a snapshot of your situation they will also carry out a credit check (do you pay) and credit score (are you likely to pay them). If all goes well they will accept you and you then have an agreement in principle. This is great if you are looking at property, as you will now know that a lender or lenders are willing to provide you with money.
Estate agents will also like to know this information as it shows you are motivated and have got your finances in order.
Now we have your borrowing capacity, costs, deposit and monthly payments sorted and we also have an agreement in principle backing all this up.
Let the fun begin!
You can now move to the exciting bit, hitting Rightmove, Zoopla, Prime location and your local estate agents to find your dream property.
A few tips here would be.
- Set up Rightmove alerts so that you get emails/texts as soon as a suitable property is listed.
- Contact your local agents directly, you may be wary about being hounded by estate agents if you do this, and this can happen. But if you are looking for a very specific type of property or something in a very sought after area dealing directly with the estate agent can put you one step ahead of other buyers. This is because property listed on Rightmove can take up to 24 hours to appear, if an agent knows you are interested they would be able to pick up the phone and get you through the door before anyone else.
So, you have a property in mind and have arranged a viewing with the agent…
If you get the scenario where the seller has to sell you may be able to negotiate an offer on the asking price. For example, someone who is relocating for work has a finite time to move and wouldn’t normally want to have the costs of an empty property as well as their new accommodation.
Being a first time buyer you have no chain (no property to sell) and with your finances agreed and in order you can move quickly and in some circumstances, you can charge a premium for this by way of a reduction to the purchase price.
Basically, any timescale attached to the property sale is good news for the first time buyer!
This doesn’t have to be a fast timescale either, some sellers may need time to find their ideal next home, if you are a first time buyer living at home (I.E. low housing costs) you could give them this time assuming you are in no rush to leave mum and dad.
Don’t miss out on this valuable opportunity by whizzing round the house, take your time ask questions and just have a general chat, you would be surprised at what a lot of sellers will tell you if you simply ask the questions.
Worried about dealing with agents, let us do it for you!
Dealing with estate agents can be daunting, we do it all the time so if this is something that you would like some help with just ask. As a well-known Ipswich mortgage advisor, we have dealt with many local estate agents on a regular basis, we also deal with agents further afield across the country so if you are worried about this aspect of buying don’t be!
We can put your offer in for you and negotiate the sale, this is at no additional cost!
So, dream house found, offer accepted (a few butterflies!) What next?
We now need to research the exact mortgage product we are going to take and get your mortgage application sent to the lender.
We will present you with some options and work together to finalise the product, amount of mortgage and term you wish to take.
Assuming we have completed the agreement in principle process we will then re-fresh any of your documents wage slips, bank statements etc. and send your application to the lender. Checking that we have the detail down so that the application process goes as smoothly as possible.
Once the application has been received the lender will do several things,
- They will instruct a surveyor to check that the property is in a suitable condition for them to lend on (see surveys link)
- They will take your application through the underwriting process, this is where they scrutinise all your information. After this, sometimes they will come back to us with additional questions or requests for further documentation.
As your mortgage advisor, our job is to anticipate these questions before they are even asked, so our aim is to have tried to answer everything within the application to make this additional requirement list as short as possible.
Once the lender is happy with you and have received a satisfactory survey report. (see what can go wrong with my survey report) they will grant your mortgage offer.
This will be checked for accuracy by us, you and your solicitor will also receive a copy.
Our aim is for our service to be 1st class and our goal is for you to be able to hand the job over to us and forget about it until it’s time to move in, our service consists of the following.
We will handle your initial assessment and agreement in principle (to make sure the lender will lend you the desired funds).
Apply for the mortgage on your behalf and liaise with the lender dealing with any questions or documentation requests through to mortgage offer stage.
Advise and arrange any related insurance products for you, such as life assurance, critical illness cover, home insurance etc. (see insurance section)
Liaise with your solicitor to achieve a successful exchange and completion for you.
Want to know which house you can afford to contact us today!
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