Being a first-time buyer can be a scary process but we have the caring hand to help you on your journey.
We have you covered for all the stages on your journey to becoming a home owner.
Buying a house is, for most, the single biggest financial commitment you will make in your lifetime. It’s a big step and is the one of the most stressful things you will ever do.
How do I get on the property ladder?
This is the most common question I am asked by first time buyers. Most people know that you need a deposit, but how much is enough? Where can it come from?
The minimum deposit you will need depends on what you can borrow and what type of property you are buying.
Aim for 5% as a minimum. It must be from your personal savings and you must be able to show the deposit being built up on your bank statements.
Use a savings account or ISA to keep the money separate from your day-to-day spending.
Check out our blog with handy tips on how to save for a deposit.
If you are lucky enough to have family who are willing to give you your deposit, this is classed as a gifted deposit. As with your own deposit, you will have to show the funds being built up in the bank account.
The donor will have to sign to say the money is a gift and that they have no financial interest in the property.
Once you know what level of deposit you have available, it is time to speak to us. We can let you know based on your income how much a mortgage lender will lend to you. We will search our panel of over 155 lenders to find the lender that will provide you with the most money at the lowest rates.
We then supply you with a document that is called a ”Decision in Principle” or sometimes known as an ”Agreement in Principle”. We will approach the lender, provide them with some information regarding you, your income, credit commitments and your required loan amount. The lender assesses this information and performs a soft credit search on you. If they are happy, they produce the Decision in Principle confirming how much they will be willing to lend you.
Once you have the Decision in Principle, you can contact estate agents to arrange viewings on properties. You will also be able to make a formal offer on your first home. When this is accepted, we get the ball rolling for the formal mortgage application to the lender.
The Prudential Regulation Authority and the Financial Conduct Authority who oversee all the mortgage lenders and mortgage brokers request that thorough checks are carried out on all applicants. This is to help protect people who are taking on a mortgage and also to help protect the lenders so that another financial crash doesn’t happen (OK, no one can guarantee that, but better checks is helping prevent one!).
As a minimum all applicants will have to provide the following:
- Photo identification – valid and in date passport, national ID card, UK issued photocard driving licence, firearms licence, military ID.
- Proof of address – a utility bill dated within the last three months (must be a gas, electricity, council tax bill or water bill), photocard driving licence (if not used for photo ID), bank statement dated within the last three months.
- Three months bank statements for all bank accounts – this is for Anti Money Laundering policies. How your bank account is conducted can show a lot to a lender and broker about the type of borrower you might be.
- Credit report – I always request this from my clients as this shows up all the information I need to find you the right lender.
I always recommend signing up for a free 30-day trial to Check My File*. It shows all three credit referencing agencies in one place. It’s £14.99 a month after the free trial, but you can cancel your subscription at anytime. *Affiliate link*
You need to be able to prove your income and depending on whether you are self-employed or employed will depend on what documents the lender will ask for.
- Latest 3 months payslips
- Latest 13 weeks payslips for weekly paid
- Latest P60
- Employment contract
- Letter from HR confirming details of your employment*
- Latest 3 years SA302s
- Latest 3 years Tax Year Overviews
- Latest 3 years accounts
- Accountant’s certificate*
*Some of the items a lender may request directly from your employer or accountant.