Tips for first time buyers

Securing a mortgage is undoubtedly getting more difficult, first time buyers have more to prove to lenders to secure great deals. Read on to find out how to improve your chances of securing your first mortgage

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Preparing for a mortgage application

Time spent preparing your finances now will pay dividends in the future. We’d advise potential homebuyers to look at their financial situation and credit report as soon as possible. Improving your credit rating will boost your chances of securing a mortgage deal. If you find any errors in your credit report, tell the credit reporting company, in writing, what information you think is inaccurate.

‘Build a clear, consistent track record of positive money management.

Get your finances in order

To maximise the amount you can borrow you would have no debt. Any outstanding debt will reduce the amount you will be able to borrow. It’s not always possible to have zero outstanding credit but planning well in advance to reduce your borrowing will help. We don’t recommend taking out any new loans just before applying for a mortgage.

It is however good to have some credit, this enables lenders to track you and can see that you have been making regular payments for a set period of time.

Some clients with a large amount of debt, kept up to date could have a better credit score than a client who has never borrowed

Overdraft ?
Credit Cards & Store Cards ?
Loans ?
HP Agreements (car / shopping) ?

Proving you income

Pay Slips

  • Guaranteed or regular overtime/bonus that can be proved
  • Other income (investments/state benefits)
  • Self-Employed (3 years self assessment statements)

Bank statements (3 months where you income is paid into) Your bank statements must match your pay slips. They will also get scrutinised for other spending, so not declaring a credit card, childcare payments and regular online spending at gala bingo will affect your affordability.

Keep your documents in a safe place and ready to go

Identification

  • Main Identification (passport / driving licence)
  • Electoral Roll
  • Proof of address: Bills (electricity/gas, credit card, mobile phone)

If you don’t drive and have never been abroad, it would be worth your while getting a passport.

If you are not on the electoral roll currently, check your local authority website about getting registered to vote.

Can you prove who you are?

Fact Find (financials)

This is completed every time you apply for a mortgage even if you already own your property and looking to remortgage to a better deal.

Employment

  • What age do you expect to retire
  • If part time (hours)
  • If contract – term of contract
  • Outgoings
  • Balances of credit / store cards not paid off each month
  • Sums that you pay off each month
  • Are they rising/falling/stable

Credit History

  • Get a report and check it for errors

Dependants

  • Do you care for elderly parents
  • Childcare payments
  • Maintenance payments for children not living with you

You may also be asked:

  • Do you plan to start a family or have more children?
  • Do you expect your income to fall in the near future?
  • Do you plan to leave your job, start a business or become self-employed?
  • Have you ever taken out a payday loan?
  • Do you ever gamble?

Can you afford it?

Affordability Calculators

As well as the fact find, you will be asked about your regular monthly outgoings. This could include mobile phone bills, how much you spend on nights out and weekly food shop. This is to asses how much you spend and how likely you are able to afford mortgage repayments.

As you hand over your bank statements, it would be worth economising for a few months prior to applying for a mortgage.

Every lender is different: we have provided links to affordability calculators for you to be able to review the types of questions asked.

How much do you spend?

Dates

You will be asked for a lot of dates. It’s worth getting prepared:

How long have you lived at your current address, If less than 3 years (previous address details) and dates. Date started with current employer and details of probation period if relevant. If less than 1 year, previous employer details and dates from/to.

Dependants
Hopefully you can remember the date of birth of your children, but just in case!
If you care for your parents or other member of your family you will need to their date of birth and declare if they are financially dependent on you

When?

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE