First Time Buyer Mortgage Broker

The first time buyer mortgage process

1. Speak to an expert mortgage broker

It is never too early to speak to a mortgage broker, even if its a year or two ahead. Preparation is the key to getting that yes when you are ready to apply for a mortgage. We will talk you through the entire process of buying your first property from calculating how much you can borrow, what deposit you will need, making sure your credit score and bank statements are mortgage ready, explaining all the fee’s involved including stamp duty, solicitors and lender fee’s and even helping you to find your first property.

2. Get an agreement in principle

A mortgage agreement in principle (AIP) or decision in principle (DIP) is a certificate issued by a mortgage lender that shows how much you can borrow, having been credit scored and fully affordability checked. An estate agent will ask to see a copy of this certificate when you book a viewing or make an offer on a property and is unlikely to accept an offer unless you have one. 

3. Find your dream home

Now that you know what your budget is, it’s time to find your dream home. Most people start their search on property websites such as Rightmove and Zoopla, which list properties being sold by all estate agents in the UK. Once you have viewed some properties and found the one you will need to make an offer and negotiate the final purchase price with the estate agent.

4. Instruct a conveyancing solicitor

Once your offer has been accepted you will need to formally instruct a conveyancing solicitor to carry out the legal work. This will include performing local authority searches, raising a number of enquiries for the sellers solicitor to satisfy, handling the mortgage and deposit funds and preparing contracts for signing ready for exchange and completion. We can recommend a conveyancer.

5. Apply for a full mortgage offer

It is now time for us to submit your full mortgage application to the chosen lender. This is when you will need to provide all supporting documents including proof of income, deposit funds, ID and bank statements. The lender will normally take several weeks to review everything submitted and carry out a property valuation before issuing your legally binding formal mortgage offer.

6. Exchange, complete, pick up the keys

The final steps in your property buying process, but also the most exciting! On the agreed day of completion all solicitors involved in the chain will deal with all of the final legalities and transfer the funds to each other. Once funds are received you will receive a call from your solicitor giving you authorisation to collect the keys to your new home. Welcome to your new home!

How much can I borrow as a first time buyer

How much you can potentially borrow for a residential mortgage is based on your income. Lenders mostly use multiples of your income to decide how much they are willing to lend you; this ranges between 4 to 6 times your income, depending on many different factors, including things such as your credit score, your deposit and whether you earn over a certain amount.

Lenders accept income from lots of different sources including employed salary, net profits and dividends from self-employment, Construction Industry Scheme CIS payslips, rental income, pension and various benefit income including child benefit, universal credit, Personal Independence Payments PIP and Disability Living Allowance. Lenders will also look to accept income from a second job and any monthly, quarterly and annual commission, over-time, and bonuses. Although how much of this they are willing to accept depends on each lender.

It is important that you speak to a good mortgage broker that works with all the lenders and knows all of their criteria, so they can accurately calculate your maximum available mortgage loan.

How to get a mortgage as a first time buyer

1. Calculate your budget

You can’t start looking for your new home until you know how much you can actually borrow and afford to spend on your mortgage payments each month. Go through your bank statements and look at what you have coming in and going out of your account every month, so you have an idea of all your current financial commitments and what you have left over. The actual amount you’ll be able to borrow will depend on how much you earn, the deposit you have, your credit score and thus the lender you go to, as they all have different criteria and loan to income multiples. We can work all of this out for you.

2. Save your deposit

The amount you can afford to put down as a deposit will affect which mortgages you can apply for. Generally you will need a minimum deposit of 5% of the property value to qualify for a mortgage. There is one lender who will consider a mortgage with no deposit, however their criteria for this product is very strict so you would need to tick all of their boxes. The bigger the deposit you can save, the wider the choice of mortgages you will be eligible for. You’ll also benefit from better rates. Remember that you’ll have other costs, such as stamp duty and conveyancing fees, to cover too.

3. Check your credit report

When you apply for a mortgage, lenders will run a full credit search to check that you have managed any debt responsibly. They all check a variety of different credit reference agencies to do this such as Transunion, Experian or Equifax. Each one of these credit reference agencies reports slightly different data so it is best to check all three. You can do this by requesting a free 30 day trial of Check My File. It’s a good idea to have a look at your credit history long before you submit your mortgage application to see if there are any issues which might affect your chances of being accepted, and therefore you may need to work on over a period of time to improve. For example, if you’ve got any credit card accounts you no longer use, shut them down, as keeping them open can negatively impact on your score. Even simple things, such as not being on the electoral roll, can also damage your rating.

4. Organise documentation

Knowing what paperwork will be required well in advance so that you can start getting it all together will help speed up your mortgage application and ensure you get accepted. Lenders will want to see proof of your income such as payslips, p60, HMRC limited company accounts, tax calculations and over views, benefits award notices. As well as 3-6 months bank statements showing your income and outgoings. They will be looking through your bank statements with a fine tooth comb to see that you are receiving a regular income, not over spending, constantly using an over draft (they don’t like this) and for unpaid direct debit charges. Lenders will also want to see proof of who you are and where you live, so you’ll need to produce both photo ID such as passport, and recent utility, council tax bill, bank statement or driving licence all with your correct current address on.

5. Secure an Agreement in Principle

Before you find the perfect property it’s a good idea to request a mortgage decision in principle or ‘agreement in principle’ from a lender. This helps you understand how much you could borrow before you fully apply for a mortgage. A mortgage Agreement in Principle is obligation-free and only involves a soft credit check, which means there’s no impact on your credit score. To secure this mortgage promise, you’ll need to supply some basic information, such as a minimum three year address history, employment history, passport & driving licence, your income and how much you want to borrow. A mortgage agreement in principle is not a guarantee that you will definitely be offered a mortgage, but it can help show estate agents that you have the borrowing capability.