As a first time buyer it can be daunting when you’re considering buying your first home. There’s so much information online and from a whole host of different sources & it can be very difficult to know what is true or false, what is genuinely useful and what isn’t. Alongside the confusion of knowing what to believe online, you’ll most likely be being given ‘advice’ from parents and family members, friends or work colleagues whether you have asked for it or not! The problem with all this ‘advice’ you might be getting is that, often you don’t want to appear rude and so often sit and listen patiently, you may also think that what you’re being told is true. Now, this isn’t to say that what you’re being told is incorrect – however things in the UK property and mortgage market change quickly and often, never more so than they have during this pandemic, which means that what may have been the case 6 months ago may not be the case now. This is the very reason why we always suggest talking to an experienced qualified mortgage broker as soon as possible in the process as they will have the most up to date knowledge about both the property market, the legal processes and if they have changed and of course what is happening within the mortgage market and what mortgage you may or may not be eligible for.
That aside, there are a few things that all first time buyers can do to improve their chances of being accepted for a mortgage during this strange and unprecedented time and that will prepare you for the home buying process. That said it’s not just first time buyers that this applies to, but will likely have the most impact for.
So in no particular order here’s 5 things that you can do now to give you the best chance and prepare you for when you want to make that offer on your first home.
1. Make sure all your documents are registered correctly; this means checking to make sure your passport is valid and if you have a driving licence that it is registered to the correct address (did you know you can get up to a £1000 fine from the DVLA for not having the right address on your licence), making sure your payslips and P60 have your current address on and all your bank accounts are registered to where you live. If you’re renting are you on the utility bills if you share with a partner, & most importantly make sure you’re on the electoral roll. All the above will help to tie you to your current address and some of them will improve your credit score which is always vital when applying for any type of credit.
2. DO NOT MAKE ANY OFFERS ON ANY PROPERTIES UNTIL…you have had your affordability checked by a good mortgage broker, you’ve had your credit files reviewed and your AIP (agreement in principle) approved for the size of loan you need on the terms that are most suitable to you, taking into account all your individual circumstances.
3. Do not take out any credit in the 3-6 month run up to buying your first home, and certainly do not take out any credit during the mortgage process as this has the potential to cause it all to fail and costs to have been incurred.
4. Make sure you save your deposit in a specific account and try not to have it all over the place. Lenders and solicitors & brokers have to check where the deposit has come from, and be able to see the build-up of funds over time and if this is spread amongst 2 or 3 current accounts it can be difficult to see where it all is. Often you’ll be asked to provide at least a 6 month history of bank statements to show this and if you can’t it can cause the process to be delayed or your application to be rejected.
5. If you are receiving a gifted a deposit by a parent or other family member, be aware that there are forms that need to be completed by the person giving the gift (note it cannot be a loan, it does need to a be a non-repayable GIFT) and that they may be required to produce ID and bank statements to show where that money has come from. If a family member that is gifting you money are not prepared to provide bank statements then don’t accept the gift as lenders will not accept this, and even if the money has already been transferred into your bank account the solicitors, lender and broker will still need at least a 6 month audit trail to evidence where the money has come from.
If you follow the above guidance it will help when the time comes to make those offers, and of course if you’re in doubt you can contact us to discuss your options and all the above in more detail.
