Tel: 02882 244919
Mob: 07751 200074
Email: info@tyronemortgages.co.uk
Sean Brogan
Mortgage & Protection Adviser
35 Knock lochan
Omagh
BT79 7GZ
A First Time Buyer is anyone planning to buy their first home to be used as their primary residence. In recent years it’s been difficult for First Time Buyers to get onto the property ladder, however, getting the right knowledge and preparing in advance of your application can be instrumental in obtaining a competitive mortgage offer.
An agreement in principle, also known as a decision in principle, is a conditional mortgage offer from a lender, prior to your full application. It can be extremely beneficial to First Time Buyers.
Obtaining an agreement in principle prior to making a mortgage offer can increase the chance that your offer is given serious consideration by the vendor. First Time Buyers are in an incredibly strong buying position purely because they do not have to sell a property prior to buying and with confirmation via an Agreement in Principle this should ensure any offer made by a First Time Buyer stands out from the crowd.
The additional benefit as a First Time Buyer to obtaining an Agreement in Principle prior to finding a home and making an offer is peace of mind that the offer made can progress through to completion and avoid later disappointment of not being able to subsequently purchase the property you have fallen in love with.
The fact that you are a First Time Buyer shouldn’t determine how much you are offered by lenders. Your loan amount is calculated based upon your financial circumstances and credit score, much like any other applicant.
Your mortgage offers are likely to vary from lender to lender, as they all have their own criteria. To get an idea in advance of how much you might be able to borrow, there is a range of free mortgage calculators available online, however the accuracy behind these calculators is based upon input placed within and we would strongly recommend liaising with a Mortgage Brokers to ensure delivery of accurate outcomes to avoid disappointment. A Mortgage Broker such as ourselves can also help you check your affordability with many lenders in the touch of a button, saving you time and effort, whilst also checking lending criteria requirements alongside.
Alongside your income, your credit score has the most impact on whether or not your mortgage application will be accepted. Before approaching any lenders to apply for a mortgage, it’s essential to be aware of your credit rating, taking steps to improve it, where needed:
We want to keep that relationship with you up until your mortgage completes in 20, 25 or maybe 35 years. It’s not just a one-off transaction. It’s a long-term relationship, where we watch the market to get you the most positive products out there and try to save you money.
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Typically, it’s 5%, but not all lenders offer this, some may ask for a higher deposit from a First Time Buyer. For a standard residential mortgage application, you will need a deposit of between 5% and 20%.
If you have a low expendable income, it can be difficult to raise a large deposit. There are, however, some government schemes available aimed at helping First Time Buyers, such as Co-Ownership, which have more flexible requirements.
It’s really important that you take time to understand this and what it means. This is called an Equity Sharing Lease and it is the agreement between you and Co-Ownership. It outlines what you can expect from Co-Ownership and what Co-Ownership expects from you.
There is the Lifetime ISA which can help you save for a deposit. The government tops up your savings by 25% if they are used towards a purchase of a house. The maximum you can save into a Lifetime ISA each tax year is £4,000.
We would need some ID to make sure you are who you say you are. We would need a copy of your credit report so we know where to place you.
Proof of income is important to verify what you earn – then, when we take it to a lender to get a Decision in Principle, we know exactly what we are working with. Your Decision in Principle is like a certificate that will enable you to go off and begin looking at houses.
The very first step is to speak to a mortgage advisor to work out how much you can borrow. Then you know how much your purchase price could be. You’ll need your deposit in place, whether it’s coming from savings or perhaps via a gift.
Next, you get your Decision in Principle – your golden ticket to begin house hunting. Once you find a house, you’ll make an offer and come back to your mortgage advisor and we will start the mortgage process in full.
We’ll talk to you about different mortgages, different rates and whether to choose a two, five or 10 year product – then we submit the mortgage application on your behalf. After the underwriting process, you will hopefully have a mortgage offer.
We will also speak to you about home insurance, which is mandatory, plus life insurance, income protection, critical illness and others to make sure that you are fully informed about the possible pitfalls as well. That will make sure that if anything were to happen you can stay in the property.
We then liaise with solicitors and estate agents, keeping everyone informed along the way. You’ll exchange contracts, which is part of what your solicitor does, then you will complete, move into your house and begin making your first mortgage payments.
The first mistake is not getting an Agreement in Principle before you make an offer on a house. That happens more often than you think and sadly it causes a lot of stress.
Another error is underestimating how long it’s going to take to get a mortgage. I’ve worked with people who have given notice to their landlord, thinking it will all be done in two months. There’s a lot of panic in that situation. Never hand in your notice until you know you’ve exchanged or even completed.
You should also avoid taking out car finance, going into your overdraft or borrowing on your credit card while you’re in the mortgage process. Lenders will do further checks after the mortgage offer is issued. If you take out further credit, it can put your mortgage offer in jeopardy – so it’s strongly advised not to do that.
Also avoid changing jobs if you can. If you go from being a teacher to an estate agent, for example, that’s such a radical change in career that you’ve an obligation to update the lender. If they don’t like that, it could again jeopardise your mortgage offer.
Another thing is not checking your credit score before applying for the mortgage. Don’t go house hunting not knowing what your credit is like and which potential lenders we could go to.
People also underestimate how much it’s going to cost. You need more money than just your deposit – keep some back for solicitors, mortgage fees, surveyors and other professionals that can come into the process.
Very often people will penny pinch and go with a cheap solicitor – but you do get what you pay for. If you want the process to be smooth, quick and efficient, pay a little bit extra to get a better quality service.
It’s also common for people not to do any research on the area they’re moving into or on the property itself. Not asking enough questions can be an error. You might be buying a leasehold, not a freehold – or it could be a unique, quirky type of build that a mortgage lender won’t accept.
If you’re thinking you’re not able to make that payment this month, first contact your lender. They’ll take it into consideration and should give you a grace period. If you’re struggling with your payments, your lender has to take your situation into account and help you out. They might give you a payment holiday, put you on interest-only or create a payment plan for the arrears.
The worst thing you can do is be an ostrich and put your head in the sand. Inform your lender to prevent any difficulties – they will try to help you out. The last thing they want is for you to get into arrears. If that happens for more than three months you are at risk of losing your property – the last thing anyone ever wants.
Yes, you can. Just because your credit’s not perfect, you’re not excluded from the property market. You’d need to know your credit score and what the credit issues are. Then your mortgage adviser will be able to tailor you towards different lenders that accept your situation.
A lot of the time they would want a higher deposit from you, maybe 15-20% because they want that security. But yes, it is possible. We do it regularly for clients to get them the mortgage they need.
Always speak to a mortgage adviser, because no matter what your situation or circumstances, we can give you advice. We’ll say whether it’s feasible or not. If it’s not right now, we’ll create a plan to get you where you need to be.
If you do have bad credit we help you improve it so that in a few months you’ll possibly get the mortgage you want.
Buying a house is very daunting. None of us are taught this stuff at school. So seek advice from someone who’s going to guide you and educate you and help you make an informed decision.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
As a highly experienced Adviser I am ready to help you with either buying or remortgaging a home, protecting your property and lifestyle along with saving you time and effort, ensuring you have a competitive deal that is right for you.
Sean Brogan
Principle and Mortgage Adviser