First Time Buyer Mortgages
Mortgages for First Time Buyers
Purchasing your first home is likely to be your biggest financial decision to date. You should take advice regarding setting up a mortgage. We will cover some of the things you will need to consider. This page DOES NOT replace financial advice and we strongly recommend you contact us at an early stage. We do not charge any Broker fees providing your mortgage loan is at least £100k
What do I need to get a mortgage?
Income; you will need to have the capacity to borrow
You must have a provable income. This can be as an Employee or as Self Employed
Income; you need to have a reliable long term income
A mortgage is a long term commitment. You need to be prepared to earn an income for the duration of your mortgage
Are you buying with someone else
You can buy a property with up to three other people. Some lenders will then consider the incomes of the other applicants. You should consider that if two incomes are used for a mortgage application then if one of the applicants wants to leave, the lender may judge that the mortgage is no longer affordable which may lead to the sale of the property
Deposit; you may need a deposit
You will have more mortgage options if you have a deposit. The minimum deposit is NO deposit! Please read more about a deposit for home purchase
Credit history; you will need to have an acceptable credit history
Before lenders lend money, they will want to assess how likely are you to pay your mortgage. They will look at your credit history - see whats your credit score like below
Is the property affordable
We can help assess affordability. Click on the Mortgage Enquiry link now
What type of property do you need
How many bedrooms will you need. Do you need a separate Office. How about a garden? Do you have any pets
Is the property located within commuting distance of work?
You will probably need to commute every working day so the daily commute needs to be reasonable. How much will it cost to commute to work?
Is the property located close to Local amenities?
Consider things like Schools, Shops, Parks, Pubs etc. All the things that are important to you.
How much can you borrow
As a first time buyer, most lenders will restrict borrowing to about 4.49 x's your total annual earnings
If this is a joint application then the combined annual incomes of both parties can be taken
For example
John is a Teacher with an income of £35,000 pa
Joanne works in IT and earns an income of £45,000 pa
Their joint income is £80,000 which gives a borrowing capacity of up to £359,200 (4.49 x £80,000)
If they have a deposit of £20,000 then they could consider properties with a purchase price up to £379,000
It may be possible to borrow more than this. Please contact us to discuss further
For more information click on How much can I borrow
What's your credit score like?
Lenders will want to establish how credit worthy you are. They do this by looking at your credit history - how well you have kept up past credit commitments.
Mortgage lenders use credit reference agencies to assess your credit history
Two of the biggest credit reference agencies are Experian and Equifax
You can apply to these agencies to see the information they hold about you.
Is it a good idea to check your credit file before applying for a mortgage?
Absolutely!
We recommend that you contact one of the credit agencies to request your credit file. Experian and Equifax often have promotions where you can access your file free of charge.
You may think that your credit file is good but it is quite possible that there are mistakes or oversights which may have caused your credit score to be not as high as it could be.
This information is also very useful to us for finding you a mortgage
What type of property do you need
As a starting point you should consider how many people will be living in your new home
If you have two children, it is likely you will need a minimum 3 bed home
Will you be working from home. If so, you may need another bedroom to use as a home-office
How will you accommodate visitors?
If you have children, where will they play. Where will they go to school?
Do you want a garden?
Is this area safe
How far is it from work
There may also be practical considerations - do you need wheelchair access?
Are stairs going to be a problem?
What things do you like about your current home? Maybe you can incorporate this into your wish list
What is important to you?
What government schemes are available
The government of the day are always eager for your votes. There are often initiatives to help first time buyers onto the housing ladder.
At the time of writing this article, the following promotions are available:
Help to Buy
Shared Ownership
Right to Buy
Homebuy
You can read more about these government first time buyer schemes here
What documents will you need
You are going to need proof of income
If you are employed this will mean your latest 3 months payslips
If you are self employed you will need at least one full years proof of income. Normally this will be confirmation from the Inland Revenue of your taxable income in the form of a Tax statement of income (known as a SA302). Ideally you would have at least two of these for your latest 2 years trading.
You can be self employed as a sole trader or partnership or a Director of a limited company - see mortgages for self employed
You are going to need your latest 3 months bank statements showing your income and day to day expenses
You will need to prove your identity and address. You do this by providing either your passport or driving licence. Your driving license MUST show your current address. (This is also a legal requirement) For proof of address you could send your current council tax bill, or your latest utility bill. Utility bills are the services to your current property so Electricity, Gas, Water or landline telephone
Why use a Mortgage Broker?
Buying a new home is a big financial decision. Having an Adviser on your side will make things much easier for you
You will receive good advice when you need it
How much will it cost?
Nothing. Providing your mortgage is at least £100k then we do not charge you any fees
We recommend that you contact us at an early stage
How much will it cost to use Mortgages Direct
We do NOT charge you any fees under ANY circumstances providing your mortgage is at least £100k.
If your mortgage is under £100k then we charge a fee of £199
How can you operate without charging any fee?
We receive a fee from the Mortgage Lender.
What if my Offer to buy is declined or my mortgage application fails?
These things happen. The vendor can back out of the sale at ANY point prior to Exchange of Contracts. All you can do is find another property and start the process again. If your mortgage application fails, it is important to establish why it has been declined. As a Mortgage Broker we may be able to help where an application has been declined by a mortgage lender
How do I make a start?
Please fill in our Mortgage Enquiry form
Does it count against me if my mortgage application is declined
Yes. Mortgage Lenders may ask if you have had an application for a mortgage declined - you would have to answer yes. The new lender will want to understand why the original application was declined