Your Guide: First Time Buyers

Your first mortgage journey should be an exciting one, but without the right guidance can be scary and stressful, don't worry! We've created this helpful guide to support your purchase.

Can I Get A Mortgage?

That's the big question, and it's one that can't really be answered in and article.

If you've not missed any payments on anything and your income is high enough then you should qualify with most lenders, but each application is judged on your individual circumstances.

Lenders look at your employment status, affordability, age, credit score, property type, and a whole host of different things.

Credit scoring systems these days are so complex, so it's impossible to work out exactly what score they'll give, meaning making a prediction on whether you'll get a particular mortgage is difficult.

The good news is, that as every lender is different, and if you've been declined once it doesn't mean you cant get a mortgage with another lender.

If you're struggling, we'd suggest you get in touch and an adviser can see if there's anything that can be done based on the latest market criteria.

How Much Can I Borrow?

This really depends on the income and commitments you'll have when you've got the new mortgage.

As a general rule, 4x your salary is a reasonable starting point, but can be up to 5x depending on credit profile.

When it comes to income, every lender takes different incomes into account. Some take state benefits, overtime, shift allowance, bonuses, holiday pay, dividends, investment income, retirement income, overseas income, others don't.

Again, it's recommended is to make an enquiry so an adviser can calculate your borrowing limits.

How Much Deposit Will I Need?

​A common concern for first time buyers is a lack of a decent sized deposit.

At the moment, the minimum is 5% across the board, but these are scarce and have very strict criteria to meet if you are to obtain one, not to mention usually coming with a higher rate than 10 or 15% deposit deals.

With the introduction of the Help to Buy scheme however, buying any property with just 5% deposit is now much easier.

Specialist lenders can often help you if you have a minimal amount to put down as deposit, and with the right advice you can save hundreds on your mortgage by getting the rate right.

Using a whole of market mortgage broker like Create Finance can help ensure you get the most suitable deal available.

What Will My Mortgage Repayments Be?

​This will be determined by the amount you borrow, the rate, any fees added onto the product, and the term.

Historically, mortgages were lent over 25 years to start with, nowadays things are much more flexible.

To find out what rate you're likely to be on, give us a call and have an adviser calculate this for you.

What Government Schemes Are Available?

Several government schemes have been put in place to help first-time buyers and certain key government workers obtain mortgages. These include:

  • Help to Buy - buying new or existing properties with just 5% deposit.
  • Key government worker mortgages - for instance; teacher mortgages, mortgages for soldiers, mortgages for doctors and other professionals.
  • Shared ownership/equity - we will talk about these in detail below.
  • Right to buy - This is where your local authority or housing association grants you the ability to purchase your rented council house if you've lived there for a number of years and satisfied a number of other specific criteria. They usually offer a larger discount from the market value, which can be used as a deposit.

Whatever your background or circumstances,
Create the financial future you deserve.

What Is The Full House Buying Process?

Get your mortgage agreed ‘in principle'

This means that a lender has assessed your personal details – things like occupation, credit history, income and your other financial responsibilities, amongst others – and is happy to lend you ‘x' amount, subject to the valuation on the property being ok, and the info given being correct and supported by the proof they require (pay slips etc).

You will also have an idea at this stage of your product, rate, fees, and monthly repayments via a document called the Key facts illustration (KFI).

Find a property

Then its down to you to find a house and put an offer to purchase in.

Instruct the Valuer

When you've had an offer accepted, the lender will need to instruct a valuation of the property to check its worth what you're paying for it.

They can also, at your request, perform home-buyers reports and full structural surveys (additional cost), and this is your decision based on whether you think the property requires more in depth analysis.

Formal mortgage offer

​Once the lender is happy with the valuation and all your documents, they will formally offer the mortgage and send copies of the paperwork out to you and to the solicitor to get ready for completion.

The mortgage at this point is sorted.

Most lenders and brokers will be able to issue an offer within 10 days (max) of your valuation request (depending on time taken to get the val booked in), but usually much quicker than this.

It can be offered at any point after receiving a successful valuation and all documents.

Instruct a solicitor

This can be done at any point once an offer has been accepted, and if time is of the essence then some purchasers like to get the solicitors moving straight away.

However, it is advisable to wait until the valuation has been done, because spending money on legal work when you don't know the house you're buying is suitable, is a costly mistake if something on the valuation puts you off.

Solicitors can be found locally or online, usually online are cheaper.

They will then instruct searches on the property such as local authority searches (to make sure they aren't going to build a motorway through the back garden anytime soon!), mining area searches, chancel searches to see if the house is part of a parish area, and others.

Exchange Contracts

Once all searches have been done, and both the buyer and seller's solicitors have drawn up the appropriate contracts, you are ready to exchange the contracts and set a date for completion (this can happen on the same day).

Complete the purchase – and move in!

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Whatever your background or circumstances,
Create the financial future you deserve.

What is a guarantor?

A guarantor is another person (usually family member) that joins you on the application, on the basis that if you don't pay the mortgage, they have to.

They are usually not on the deeds to the property and have no ownership of it, but they will have your mortgage registered to them as a commitment.

It is usually assumed the applicant pays the mortgage on their own and the guarantor is there ‘just in case'.

If you're concerned about being able to afford the mortgage on your own, or have questions about guarantors on your mortgage application, its important to speak to an expert.

What is shared ownership?

Shared ownership mortgages are where you buy a home for say 75% of its value, and pay a developer or housing association rent on the other 25%.

You'd need a mortgage on you're share, so if the house was worth £100,000, and you bought 75% of it, you'd own £75,000.

For this you'd need a mortgage of maximum 95% (£71,250) and put down a minimum 5% deposit (£3,750).

What is Shared Equity?

Similar to shared ownership, shared equity mortgages are where a buyer owns a percentage of the property, and then instead of paying rent, takes out a low/0% rate equity loan with the developer (usually), which is repaid slowly over the term.

I have Bad Credit, can I still get a Mortgage?

It can be very challenging for people with bad credit to secure a mortgage. Often, you'll have gone to and been declined by high street banks, and will need specialist advice.

Mortgage brokers have the experience and the expertise to help you out in a situation like this. Create Finance specialises in this field.

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