After saving for years and months, you’ve finally reached the point where you are ready to make a deposit on a property. Whether you have had some help from “the bank of Mum and Dad” or have entirely relied on your own funds, it’s time to get the ball rolling!
This may be your first experience as a First Time Buyer or your second as a Home Mover in Grimsby, either way, we are here to give you some top tips on how to get prepare for a mortgage:
As a Mortgage Broker in Grimsby, we always recommend in getting Mortgage Advice as early on in the process as possible. This way you will know how much you can borrow for a mortgage and how much it will all cost. There is nothing better than having a professional Mortgage Advisor in Grimsby by your side to help guide you through the whole process.
Obtaining an up to date credit report should also be at the top of your list, you want to know exactly where you stand in terms of your credit score. You don’t want anything holding you back from buying a home. Taking the above two steps will give you a good insight into how possible this is going to be and what your budget is.
Your Mortgage Broker in Grimsby, like us, will be able to obtain a fully credit-checked agreement in principle on your behalf. In order to get this, you will have to provide some proof of who you are to us, this includes your name, where you live and how much you earn. There is a lot of paperwork for you to get together so it’s a good idea to open a file for yourself and start collecting everything in advance.
In terms of proving who you are you’ll need to produce some photo ID such as a Driving license or passport.
In addition to the above, you’ll need to prove where you live. You’ll need to produce a utility bill or original bank statement dated within the last 3 months.
The analysis of your spending habits is one of the most important determining factors in whether you’ll qualify for a mortgage or not. Lenders need to ensure that you’re going to be able to meet your mortgage payments every month. Your bank statements should evidence your income and monthly expenditures. Lenders will not be too happy to see gambling transactions on your account, neither will they like it if you go over an agreed overdraft limit or if your direct debits bounce regularly.
You will have to provide evidence that you have the funds in place for the deposit, this is also for anti-money laundering purposes. Try not to move monies around your various accounts too much as it will make evidencing the audit trail much more difficult. All lenders will like to see that your savings account has been built up over time in order to afford the deposit. It shows you are taking this seriously and managing your money well.
Gifted deposits are becoming increasingly more popular, we are seeing that most of our applicant’s 5% deposit is made up of these. These gifted deposits are often gifted by family members or friends. These funds can’t just be handed over, they need to be evidenced; meaning the “donor” will need to sign a letter to confirm that this is a gift and not a loan.
In terms of affordability, the most important thing is to be able to prove your income. If you are employed this tends to be by way of your last 3 months’ payslips and most recent P60. Lenders can take into account regular overtime, commission, shift allowance and bonus. If you are Self Employed then you’ll need your accountant’s help. This will be to request your tax year overview.
You should put some time aside to do some research and make a note of an estimate of your anticipated outgoings after you move house. You can work out an idea of how much the council tax and utility bills will be. In addition to that, you can work out your regular expenditures, such as food and drink. This will demonstrate how much disposable income you have available to pay your mortgage from.
When applying for a mortgage, to save things from getting complicated, you should get help off a specialist. Having a Mortgage Advisor in Grimsby by your side could prove extremely beneficial. You want to do your best to impress your lender and show them that you have done all you can within your power to get everything ready for your mortgage application. Grimsbymoneyman can help you with this and depending on your circumstances, we could have everything arranged within 24 hours of your free mortgage consultation. Get in touch today, we can’t wait to hear from you!
One of the most common questions we get asked from customers like First Time Buyers in Grimsby is “How much can I borrow for a mortgage”. Let’s look at the background of affordability assessments and how they apply post-2014.
Back in the day before credit scoring, mortgages were manually assessed by your local building society manager. Lenders moved towards more uniform income assessments to provide a consistent approach in the 1990s.
Maximum lending “caps” were brought in so that customers couldn’t borrow more than 3-4 times their annual income.
At the time of the credit crunch in the 2000s, these income multipliers kept becoming more and more generous. Of course, some lenders allowed their customers to “self-certify” their incomes with no background checks such as payslips.
This went horribly wrong and it was a struggle to get onto the property ladder from 2008-2010. This is because lenders battened down the hatches and created a cautious (over-corrected) lending environment.
In 2014, the Mortgage Market Review (MMR) was introduced once the market had finally recovered. This brought a new set of guidelines for lenders to adhere to. The old income multiplier method was scrapped and replaced with new, more sophisticated affordability calculators.
These new calculators gave a closer look into an applicant’s spending habits and net disposable income. This meant that the lender could have an in-depth look into your bank statements to ensure that unaffordable mortgages were not granted as they were before the Mortgage Market Review was introduced.
To this day, there is still a “lending cap” in place at about 4.75 times your annual income but your expenditures are also analysed. For example, lenders seem to penalise low-earners and even things like gambling can sometimes affect your chances of being lent the money. Some take pension contributions as a fixed outgoing so would often lend, say a public sector worker with a big pension deduction less than a private sector and so on.
If you are looking to maximise your borrowing capacity to obtain the home you want to buy then we would advise you to speak to a Mortgage Broker in Grimsby, like us. A Mortgage Advisor in Grimsby will research the property market on your behalf and try to find a lender that will lend you the right amount that you need.
Before you take out a mortgage you should sit down and have a chat with an expert Mortgage Advisor in Grimsby and work out your finances together to ensure that the repayments feel comfortable to you.
When customers like first time buyers in Grimsby have an offer accepted on a property your next job is to arrange a property survey. This will establish the condition of the property and ensure that it is worth what you are going to pay for it. If something is found on the survey you are then in a position by law to approach the seller to negotiate a price for the works required.
Here’s a short video from the Royal Institution of Chartered Surveyors (RICS) that explains the different types available to you.
There are 3 main types of property survey available to you:
A basic valuation is the cheapest option and you will be required to have one of these before you receive your mortgage offer. Please don’t confuse this with a full survey. The mortgage valuation confirms to the lender that the property is worth at least what it is lending you.
Your mortgage lender may even offer you a free basic valuation as part of your deal.
A Mortgage Valuation will not highlight any repairs that are needed. However, it may point out any obvious defects and recommend that you investigate further.
A Homebuyer’s report will cover structural safety and highlights problems, including damp, as well as anything that doesn’t meet current building regulations. This kind of report will give you an independent report of your property by an expert.
To ensure you are not paying for two surveys it is advisable to ask the mortgage companies surveyor to carry out this report for you – it will usually take a couple of hours to complete.
A Full Structural Survey is advisable for older properties and those of a non-standard construction.
Depending on the property size and type – a full structural survey can take as long as a day to complete.
A full structural survey provides a detailed report on the condition of the property and highlights issues that should be investigated further before going ahead with the purchase, providing you with peace of mind about the condition of your property.
You can find a surveyor to carry out a Homebuyer’s report or building survey through the Royal Institution of Chartered Surveyors.