Are you a first time buyer, looking to get on the housing ladder but not sure where to start? If so, this video is for you.Hi if we haven’t met before, my name is Dan, I am a CeMAP qualified mortgage & protection adviser. This video is purely for educational purposes only, and should not be seen as advice or a recommendation to act and I must stress your home may be repossessed if you do not keep up with the repayments on the mortgage.
With that out of the way, on with the video.
The first thing you should really do is find yourself a mortgage adviser, such as myself, and get in touch with them.
They will take some very basic details from you, such as your income, how much deposit you have, what property prices you’re considering, and arguably most importantly, what is your credit history like.
This information helps us establish at the very beginning if you could qualify for a mortgage before wasting your time any further.
Once we’re confident that there is a good chance of you obtaining a mortgage, then we will go through the process of a factfind. This is a mortgage application form we have that will ask more detailed information about you. We will also ask to see your passport and payslips. This helps iron out any potential issues that may arise further down the line.
If you’re self employed, it will speed up the process if you have already filed your latest accounts before approaching a mortgage adviser.
Once this has been completed and the mortgage adviser is happy they have all of the information they need, then we will look at the lender’s affordability calculators. Each lender has their own affordability calculator, as each lender will vary on how much they will lend. This is why it’s important you provide us with payslips or accounts from the very beginning.
Once the mortgage adviser has established which lenders will lend the amount you require to buy the property, we will search the market for the most suitable lender that meets your requirements. I must stress, it isn’t as simple as placing you with the lender who has the lowest interest rate, as there are other costs associated with mortgage products that need to be considered in the research before a recommendation can be made, such as product fees, valuation fees, and potential booking fees. You also occasionally receive cashback from lenders which need to be calculated.
If the mortgage quote you’re provided with seems okay to you, then the next step is to obtain a Decision in Principle this is known as a DIP or AIP, which means Approved in Principle. This is the process most estate agents ask you to be at before putting in a formal offer on a property. This is also the stage where a lot of mortgage advisers will ask you to instruct a conveyancer, if you haven’t found one yet, do not worry, a lot of advisers have dealt with firms in the past that they can recommend.
During the Decision in Principle process, you are credit searched and if successful, this is the lender telling you that subject to all the information you have provided being true, then they will consider lending to you.
This is why it is important at the beginning to know what your credit history is like as it will dictate which lenders you’ll qualify with. I have made a couple of videos on how to obtain your credit report for free and also how to improve your credit score. I will provide these links for you in the description of this video.
When viewing a property, take your time, this is potentially going to be where you live, and where you’ll be investing thousands of pounds, so you need to make sure it is the right property for you. Do not be afraid to ask to view the property a couple of times before putting in an offer. Perhaps take someone who already owns their own home with you, as they might know what to look out for.
Once you have put in an offer to purchase the property, and it is successfully accepted, the next step is the mortgage application.
This is where the mortgage adviser will provide more in-depth details about you to the mortgage lender, along with your bank statements, proof of income, and identity.
At some stage during the mortgage application process, a valuation will be carried out on the property you are buying. A lot of lenders these days will not book a valuation until the underwriter has reviewed your application and is satisfied but if you’re paying for a valuation, a bit of friendly advice would be to get the valuation put on hold until you or your mortgage adviser are more confident that you’ll be approved. You do not want to pay for a survey on a property if your application is going to be declined.
Whilst on the subject of valuations, there are 3 main types of survey which can be carried out. Speak to your mortgage adviser to find out which one is best suited for your needs.
The next step is the mortgage offer. This is a legally binding document from the lender saying they’ll be happy to lend. One thing to note here though is some lenders will place “Special Conditions” on their mortgage offer, which your conveyancer will need to satisfy before you are able to complete the mortgage.
Whilst the conveyancers are carrying out the work that needs to be done, you should be discussing with your mortgage adviser your insurance needs. There are various insurances which you should be considering. Depending on your circumstances and needs, your mortgage adviser will make their own recommendations. All the insurances are optional, but very important and you should consider them as they will provide you with protection and peace of mind of maintaining the mortgage. The only insurance which is a legal requirement is buildings insurance as this acts in a similar way to car insurance.
Once the conveyancer has carried out the required work to successfully purchase the property, you will sign contracts and exchange. When you exchange you will set a completion date, this will allow the lender enough notice to send the funds to the conveyancer and for everybody in the property purchasing chain to make arrangements to move their belongings to their new homes.
I appreciate that is a lot of information to take in, please feel free to ask me any comments below. If you’d like my help obtaining a mortgage, please contact me, my details are below.
Remember, your home may be repossessed if you do not keep up with the repayments on the mortgage.