Applying for your first mortgage?

Applying for your first mortgage

There are some points and information you need to know! 

Buying your first home is an exciting time. However, we know it can also be a minefield of information, deals, offers, and more. 

There is a lot to think about. Where do you want to live? How much can you afford to spend? Is your credit score/report good enough to get a mortgage, etc. 

There are also several factors affecting eligibility such as credit score, are you self-employed, in full time or part-time employment, what is the length of time in your current job, size of your deposit, current debts, and more. 

To help, you need a professional mortgage broker in Liverpool. Someone who understands your circumstances and listens to your requirements. 

It’s also a good idea to gather as much information as possible before applying for your first mortgage. Below, we’ve pulled together some points that you should think about before applying. 

Getting a mortgage 

A mortgage is a big financial commitment. However, there are a number of areas you can work on to help you get the mortgage you want. 

Check your affordability! 

Mortgage Assistant provides a free mortgage calculator to help you determine your affordability levels.  

To help you get a better idea of numbers, you should also begin researching properties in the area and the prices these homes are selling for. Think about where you want to live, are there things you would like to be close to, i.e., schools, work, etc., what `must haves` does the property need to have?  

How many years do you want to be tied to a mortgage, i.e., extending your term can reduce your monthly repayments; however, you will be paying this debt back for longer. 

Ensure you’re on the electoral roll. 

Making sure you’re registered to vote allows lenders to check and confirm your identity and verify that you are the person who you say you are. Registering on the electoral roll can also help to improve your credit score too! 

Start saving! 

Most mortgages will require a % deposit to be put down against the total value of the property.  

This means that the more you save, the less you will have to borrow. It also means the bigger the choice of mortgages you will have available to you. This is because the lower your mortgage, the less likely your property is to fall into negative equity.  

It’s also good to have savings readily available for things such as buildings insurance, removal fees, cosmetic updates, valuations, surveys, solicitors’ fees, and more. 

Look into current government schemes. 

There are various schemes available to help first-time buyers, such as: 

  • Help to buy scheme.  
  • Lifetime individual savings account (you deposit up to £4,000 a year, and the government will top this up by 25%).  
  • Help to Buy equity loan (you only require a 5% deposit, and the government will provide you with a further 20%, so you only need to borrow 75%). 
  • Shared ownership (you can own a share of a property and rent the remainder. You can increase your share later at a time that better suits you). 

Pay your bills on time! 

As your mortgage advisor will tell you, paying your bills on time helps you build up your credit profile.  

Setting up direct debits/standing orders can help you to avoid CCJs (County Court Judgements), which will stay on file for 6 years, reducing the chances of your mortgage application being accepted. 

Reduce your debts. 

Try to clear any current debts or overdrafts before applying for a mortgage, as this shows that you can manage your money responsibly.  

In addition, some lenders don’t like to see borrowers reporting that they live in their overdraft, especially if this goes over three months. This is because borrowers in this instance are seen as more high risk. 

This area will be looked into and discussed in more detail in your mortgage interview with your lender. To find out more about mortgage interviews, read our latest post here. 

Avoid multiple credit applications. 

Applying for other credit before applying for a mortgage isn’t the best idea. You should also avoid short-term, high-cost borrowing as this will also show up on your credit file and can give a negative impression of you and your finances. 

Check your credit report. 

It’s important to make sure that all the details in your credit file are up to date and correct.  

As well as updating your details, it is also the perfect opportunity to amend any mistakes and disassociate yourself from anyone you’re no longer associated with (especially if they have a poor credit report, as this will reflect poorly on you too). It’s also important that you close down any credit cards or accounts no longer in use. 

Work with a professional broker. 

An independent mortgage advisor in Liverpool will be able to guide you through the entire process. Providing information and advice on the range of first-time buyer mortgages, finding the most suitable one for your circumstances. 

Working with an independent advisor also ensures you have access to all the deals and mortgage products on the market; they aren’t restricted to specific lenders. 

To help, what your mortgage broker will require from you includes: 

  • Payslips (at least the last three months) 
  • P60 
  • Self-employed – accounts for the previous three years 
  • ID 
  • Utility bill 
  • Credit report 
  • And more. 

Note: For the self-employed, more information may be required, and your mortgage advisor will be able to talk you through this in more detail. 

Make sure you secure a mortgage in principle. 

A mortgage in principle shows estate agents that you are serious and that you have everything ready to get the ball rolling asap. A mortgage in principle, will require either a hard or soft check on your credit file, valid 6 months from the date of issue. 

To find the perfect broker in Liverpool to suit your requirements and help you secure that mortgage in principle, make sure to use our Find an Advisor tool today.

Reference video: alexkerrmortgage

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