The Complete Guide to Mortgage Advice For First-Time Buyers
Buying a house is one of the biggest investments you will ever make. It’s important to understand the process before you start looking for your perfect home.
If you’re a first-time homebuyer, you may be feeling overwhelmed by the process of securing a mortgage. But don’t worry – with a little research and advice from industry experts, you can make the process much simpler. With these tips in mind, you’ll be on your way to securing a mortgage and buying your first home in no time.
The first step is to make contact with a Mortgage Advisor, in particular from a Mortgage Broker firm, so they can advise you on how much you can borrow and how much of a deposit you will need as a minimum. The bigger your deposit, the cheaper your mortgage will be as a lower LTV percentage (Loan-to-Value) means you are offered a lower interest rate on mortgage deals.
LTV Calculation: It’s simple to calculate your loan to value ratio – simply divide the amount you need to borrow by the total value of the property, then multiply the result by 100 to get a percentage. Borrowed Amount (divided by) property value (multiply by) 100 = LTV%
Contact a Mortgage Broker
The first step is to make contact with a Mortgage Broker who will appoint a qualified mortgage advisor to you. It is the mortgage advisors job to calculate your affordability and how much borrowing you are going to get approved for based on your current financial situation and credit score. A mortgage advisor in a mortgage broker firm will have access to a panel of lenders including your major high-street banks. You could go direct to the lender (such as your high-street bank) however there are certain deals that the lender will only offer to the mortgage broker firm which includes lower interest rates.
Get a copy of your ‘Agreement in Principal’ or ‘Decision in Principal’ certificate
Your mortgage advisor will give you an ‘agreement in principal’ or ‘decision in principal’ which is typically valid for three months. Most Estate Agents are now asking for proof of your certificate before you can view a property to make sure you are a serious buyer and you can afford the property you are viewing.
Consider the costs involved when buying a property
When buying a house, you need to consider more than just how much deposit is required. First of all, you will need a solicitor/conveyancer for the legal work in purchasing a property. Before choosing a solicitor, you should ask for estimates of their charges for buying a property. Lists of independent qualified conveyancers and solicitors can be obtained from: www.lawscot.org.uk
Costs involved in buying a property:
- Stamp duty is the biggest extra cost when it comes to buying a home. But, if you’re buying a cheaper property you may be exempt
- Solicitor’s costs, a survey report (if you wish to have one carried out), and mortgage arrangement fees
- Moving costs and any some extra cash for any unexpected costs
Do a budget calculator and check which schemes you are eligible for.
There are lots of personal budget calculators online you can use to determine how much you can save each month for a deposit. The best way to get a mortgage is to save up for a deposit yourself however if you think that this is something you can’t do, then there are other options for you.
You can ask your parents or any other family member for help from their savings (this is known as a gifted deposit). If they don’t have savings, they may be able to release money from their property (subject to their existing lenders criteria).
If you are a first-time buyer, you may also be eligible for government-backed schemes like Help to Buy. These schemes allow more people to buy their own homes, with no need for a large deposit.
Found a property?
Once your offer has been accepted, call your mortgage advisor and do some light mortgage homework.
First of all, put a ‘note of interest’ and ‘offer’ on the property. Once your offer has been accepted, call your mortgage advisor as soon as possible and make a follow-up appointment.
You don’t have to understand anything to do with mortgages before your next mortgage appointment as your mortgage advisor will explain everything to you.
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