Hello, Anthony here from Bolt Mortgages. For some people, buying a first home can be a daunting process. The main reason is, in school, they teach you about the Pythagoras theorem and how the inside of a leaf works, but nobody teaches you about personal finances or how to buy your first home. By the time it comes to buying your first home, you're thrown straight into the deep end and have to fend for yourself. One of the issues with this is that buying your home is going to be one of the biggest purchases you make. So any mistakes that you make along the way can be very costly. Today, I'm going to talk through my top tips, on how to get yourself mortgage-ready and prevent any of these mistakes throughout the process.
Your credit report is a history of your financial commitments and how you've managed the personal debts that you've got at the moment. This will show things such as how much you've got outstanding on debts, how much your monthly repayments are, and the name of the lenders you've got them with. The report goes back to the last six years, and lenders check it to make sure that you've not fallen behind on any payments and you're up to date with all of your financial commitments. If you have a low credit score or you have fallen behind on payments in the past, although it makes it harder to get a mortgage, it's not impossible. However, you may still need to put down a higher deposit because of this, you'll have to settle for higher interest rates, and the lenders may not lend you as much.
Even if you believe you've got the perfect credit score, it's still worth checking to see if there are any issues. It's worth doing this way in advance of actually looking for a property because if you do find any issues that you weren't aware of, that are on there, you've got more than enough time to have a look through the report, find out where the issues are and put the steps in place to get yourself on the right track for when you are ready to buy that first home.
Speak to a mortgage adviser before you start looking for your home. Put yourself in this position. You've gone out, you've found that perfect house, four bedrooms, enough rooms for you to put your family in. You've got a playroom, even a swimming pool, a perfect position for your school, big driveway for all of your cars, only to find out, after falling in love with the home, it's way outside of your budget. On the other hand, you might be looking at properties that are way below the kind of property that you can afford. You might be looking at two-bedroom properties when you can afford a three. You might be looking at properties in the part of town that is miles away from your child's school. The benefit of speaking to a mortgage adviser before going out and finding these homes is that you know exactly what your budget is, so you can find the perfect property for how much you can afford.
A lot of properties are sold before actually going on Rightmove, so if you're relying on Rightmove to find your next home and you've not registered with any of the estate agents, you're going to be missing out on the cream of the crop properties. The main reason this is is if estate agents can sell properties before putting them on Rightmove, it makes the process a lot quicker for themselves and it keeps the person who's selling the house, who is their main customer, a lot happier. Another tip is to build relationships with the local estate agents. Working within the estate agent industry for the past six years, the people that have built that friendly relationship with the estate agents tend to get first picks when it comes to the properties. So, the best thing to do is forge a friendship and relationship with your local estate agent, because if you're looking for a three-bedroom property for 350,000, and they're going out to one next week, you're going to be at the top of their mind once they take that property on the market.
The first cost you need to set aside when you're buying a property is your deposit. The bare minimum you need to put down is 5%. However, the higher deposit you put down, the more you can borrow and the cheaper the interest rates are. Other associated costs when it comes to a mortgage are valuation fees, solicitor's costs, and product fees. Every lender that you speak to will be completely different. Some lenders will give you a free basic mortgage valuation, others may charge you up to £500. Some lenders will have a product fee, anything from £999 to £2,000, and then there'll be other lenders that won't charge you a product fee at all.
The product fee isn't a fee that needs to be paid upfront. You do get the option to add that to the mortgage or to pay that upfront out of your funds. Adding it to the mortgage does cost you more money in the long run, because you're charged interest on that fee that's now been added to the mortgage. As a first-time buyer, my lenders will not charge you a mortgage valuation. The basic mortgage valuation isn't really for your benefit. That is the main benefit for the lender. They find out, first of all if you've paid too much for the house, they'll let you know, and if there are any major issues that they believe they won't be able to lend on the house for, they'll also let you know about that.
Another kind of survey you can get is a home buyers report. This usually costs in the region of £400 to £500, and this goes through the property in a lot more detail. It works like a traffic light system. Green means that part of the property's fine. Amber means that part of the property might need work on in the future, and red means it needs looking at and potential work straight away. It looks through about 15 different parts of the property, and then you get a written report for you to have a look through. And again, that costs in the region of about £400 to £500.
Another thing you need to save for is your conveyancer. This costs in the region of £1,400 to £1,600, and the price can vary depending on if the property is freehold or you're buying a leasehold property. Last but not least, the stamp duty. The rules on this change regularly, so before you make any mortgage applications and put aside a budget, speak to your mortgage advisor or a conveyancer as to what your stamp duty liability will be. As things stand as a first-time buyer, anything up to the £300,000 mark, you don't have to pay anything for.
Mortgage brokers in Essex providing advice and services designed to save you time (and a few headaches!).
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