If you’re thinking about buying your first home you’re probably finding the whole process of choosing the right mortgage rather daunting. So what do you need to know to get on to the first rung of the property ladder?
Here's some useful information to help. Have a read through and when you're ready give us a call on 01225 719043 or use the 'contact us' page to get in touch and we'll talk you through the finer detail.
HOW MUCH CAN I BORROW?
The amount of mortgage you can get depends on your income and also takes into account any monthly commitments you may already have, such as loans, credit cards etc.....
Maximum income multiples do vary. As a rough guide, a typical cap is 4.5 times your income but a multiple of 5 can be possible if you know where to look. This figure depends on your individual circumstances and different lenders’ criteria. Some lenders don't use income multiples at all and will lend based on an affordability model looking at how much disposable income you have each month after your regular expenses.
HOW BIG A DEPOSIT DO I NEED?
5% is the minimum required deposit, but putting in more will get you a lower interest rate and potentially give you more options with regards to available lenders and more flexible lending criteria. Some scheme's, such as Help To Buy or Shared Ownership can be useful if you have a very small deposit - please contact us for more information on current schemes.
HOW LONG DOES IT TAKE TO ARRANGE A MORTGAGE?
It can vary from lender to lender but typically it will take around 2 weeks to get a formal Mortgage Offer issued. Various things will influence the time it takes, like whether or not you have the information the lender requires readily available (such as payslips, bank statements etc....) or how long it takes for the valuer to gain access to the property for the inspection.
WHAT IS A MORTGAGE OFFER?
A mortgage offer is a formal document from the lender confirming that they are offering you the mortgage. This is issued after the underwriting process has been completed and the lender is happy that you can afford the mortgage and the property is suitable for mortgage purposes (i.e. it's structurally sound and it's worth what you're paying for it). A copy of the offer is sent to your solicitor and this is what they use to draw down the funds for completion.
SHOULD I HAVE A SURVEY DONE?
This is entirely your decision. As part of the mortgage application process the lender will always conduct a valuation of the property you want to buy. This is really only for their own lending purposes and is to satisfy the underwriter that the property is sound and worth roughly what you are buying it for. Some lenders will give you a copy of this valuation but some will not.
If you want a more in depth survey done then there are 2 options available:
Homebuyer's Report: The easiest way to explain this is to say that it is a 'visual survey'. That is to say that the surveyor will report on all area's of the property that are visible to the naked eye and point out any area's of concern or remedial works required. This type of survey is designed to keep costs to a minimum and is likely to be the best choice if the property you are buying is conventional in type and construction, Generally the lender will do this type of survey at the same time as the mortgage valuation for an additional fee.
Full Buildings Survey / Structural Report: This type of survey is suitable for all residential properties and provides a full picture of the property's construction and condition. Because the level of detail is higher than the Homebuyer's Report, a Building Survey is more expensive. This type of survey is required when a property is of an unusual construction or has had extensive alterations, if it's old, in need of serious structural repair or if you're planning a major conversion or renovation.
The final report will include detailed technical information on the construction of the property, materials used and a listing of all major and minor defects. The report does not provide a valuation, however this can be arranged as an agreed extra.
DO I NEED A SOLICITOR?
Yes, all property purchases in the UK must be dealt with by a solicitor. If you need some guidance to find the right solicitor please contact us and we will point you in the right direction.
HOW LONG WILL IT TAKE TO MOVE IN?
This is very much dependent on how long the chain of sales is - if you are the only person in the chain (maybe buying a new build or another vacant property) then 4-6 weeks is not out of the question. However if you are part of a longer chain then all people must be ready to move before a date can be set by the solicitors. Generally, the shorter the chain the quicker the move.
WHAT COSTS ARE THERE IN BUYING A PROPERTY?
There are a number of fee's involved during the process of buying a property:
Solicitors Fee's: Can vary quite a lot so make sure you shop around or talk to us for guidance on getting the best deal.
Stamp Duty: A tax paid to HMRC on property purchases in the UK. Stamp duty is paid via your solicitor and the amount varies depending on the purchase price. There are lots of stamp duty calculators available online.
Valuation/Survey Fee's: The lender you are arranging the mortgage with will require you to pay a valuation fee so they can send a valuer to the property to make sure they are happy to lend against it. You may wish to have a more detailed survey done either at the same time or independently to make sure there are no problems with the property - however, only a basic mortgage valuation is mandatory.
Arrangement fee's: You may also have to pay an arrangement fee for the mortgage and in some cases a Higher Lending Charge - which is insurance for the lender for you defaulting on your payments when your property is worth less than the loan.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
We always aim to provide a high quality service to our customers. However, if you encounter any problems and we are unable to resolve them you can take your complaint to an independant ombudsman. Our advice is covered under the Financial Ombudsman Service (http://www.financial-ombudsman.org.uk/consumer/complaints.htm). You may be able to submit a claim through the EU Online Dispute Resolution Platform (https://webgate.ec.europa.eu/odr/main/?event=main.home.show if you live outside the United Kingdom or if you prefer not to deal directly with the Financial Ombudsman Service.)
The overall cost for comparison is 8.7% APR for customers who may have their access to credit restricted.
FX Mortgages is an appointed representative of Mortgage Intelligence Ltd which is authorised and regulated by Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only.