What are the mortgage application requirements for first-time buyers? This is a question that many people ask themselves when they’re looking to buy their first home. In this blog post, we will discuss the 10 dos and don’ts of mortgage applications for first-time buyers in the UK. By following these simple tips, you’ll be able to avoid common pitfalls during your mortgage process and get on track with buying your first property!
1. Do get pre-approved for a mortgage before you start looking for properties to buy.
Mortgage pre-approval typically includes credit checks and verification of income.
It’ll give you a good idea of whether or not you’ll be able to get a mortgage for the property that you’re interested in buying, meaning that there’s less risk involved when making an offer on it.
2. Don’t apply for a mortgage if you have any doubts about your financial situation or ability to repay it
It’s easy to get carried away during the process of making an offer, as it means more than just paying a hefty deposit.
It’s important that you have a good idea of your financial situation and your affordability – it may be worth waiting until you’re in a more secure position financially before purchasing a home.
In the UK, mortgages with low deposit rates are less common than they used to be (although this is slowly changing now with the introduction of 95% mortgages) but it might not even matter how much deposit you put down as long as your credit score is healthy.
So don’t worry – as long as you stay within your affordability range you’ll most likely have your mortgage offer accepted.
3. Don’t forget about additional costs – factor in at least 10% of the price as an annual maintenance budget
It is easy to get carried away with excitement when buying a new home but just keep in mind that the mortgage isn’t the only cost you will have!
One thing you should always remember: don’t underestimate how much it will cost annually to maintain your new property; include at least another 10% per year on top of your initial budget.
These include mortgage repayments, maintenance, insurance costs, stamp duty, legal fees, moving costs, etc.
4. Do check all the key details
We recommend that you keep top of mind, the dates of your surveyor’s valuation and solicitor checks. It’s common for these to change about, especially if you’re part of a chain.
Another important detail not to be missed is the date your mortgage offer expires. The offer will usually last for around six months, so make a note of when it ends to ensure you complete your home buying process before it expires. If the purchase falls through and your mortgage offer expires, you can contact your lender to ask for an extension.
5. Do get the help of a mortgage broker
Going at it alone will make the whole more process more overwhelming – Do get advice from an independent financial adviser before making any decisions
A mortgage broker can offer you personalised advice on the best mortgage deal to pick for your circumstances. They can save you money, time and stress when it comes to navigating the complex world of mortgages, plus assist you with your application. You can get access to FREE 24/7 mortgage broker advice by signing up to MortgageLadder.
A mortgage broker specialist will be able to tell you about the different mortgage offers available on the market, and help you find a deal that’s right for your needs. They will also provide unbiased advice when it comes down to mortgage deals that are fairly similar in terms of rates etc., as they can assess what would work best based on all of your individual circumstances (such as how much deposit you have, your employment status), so there should never really be any need to go at it alone!
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Your credit score plays a huge part in a future homebuyer’s ability to secure a mortgage. Just by looking at your credit score, lenders make assumptions on how likely you will be to make your payments on time, every time. Scores can range from 300 – 850 points and take the following into account:
Tip: Avoid applying for new credit before looking for a home loan as it will increase your debt-to-income ratio, aka DTI. That’s the difference between your overall debt and your income. Postpone large purchases (like a new car or vacation) that you would put on credit. Limit spending altogether (you want to save up for your down payment, right?) or pay in cash when possible.
6. Do understand what your affordability is
Mortgage providers calculate the amount they will lend you by looking at your annual income and your expenses. They’ll usually cap the amount you can borrow at between 4 and 4.5 times your salary, but they must do an affordability assessment before they can make you a mortgage offer.
You can work out roughly how much you’ll be able to borrow on the MortgageLadder web app. Plus you can get access to a personalised checklist and advice to improve your time-to-own.
7. Don’t bend the truth – Give accurate information
Don’t miss any details out. Be sure to review your application carefully before submitting your signature. Mortgage lenders perform extensive checks of the information you give them in your application. Much of it requires evidence such as payslips, bank statements and letters. With your income, make sure you also enter in any bonuses and commissions you get separately, instead of adding them to your basic salary.
Your mortgage application will include details of how much you earn and what percentage of that is spent on day-to-day living costs, to help the lender work out whether you can afford repayments (including interest) if mortgage rates rise in the future.
8. DON’T make big splurges
It is best to wait until your mortgage offer has been accepted before making any drastic changes to your lifestyle. This includes changing address, changing your name, switching jobs or making any large purchases. The lender will have to update these details in your application, which might slow down the whole process.
Getting a new job, where you may earn less, will affect how much you’ll be able to borrow. And making any big purchases could have an impact on your deposit savings, as well as your credit score, depending on your payment method. Applying to borrow money with a credit card, overdraft or loan could also wreck your chances.
9. DO stay Resilient
As a first-time buyer, you should prepare for a few speed bumps on the way to homeownership. Remember that old saying: patience is virtue? Well, it might just come in handy in this setting. Don’t give up, stay resilient, and keep going – stick to these “dos” and “don’ts” and you’ll be well on your way to get your mortgage.
The mortgage application process can take up to six months—sometimes longer if it’s a complex case; this is especially true for first-time buyers, who may not have all their paperwork in order or have a specific background so they are more likely to be turned down by lenders.
A mortgage application may not be deemed complete until certain documents are submitted to prove your income, employment status, credit history or whatever other requirements for that specific mortgage type. That means there could be some delays in processing your loan if missing documentation isn’t provided quickly enough. So make sure everything’s got its place before beginning this long-term project – it’ll save time and money later on down the line!
That’s one of the reasons why you want to get proper guidance from a mortgage advisor, as he can help you avoid these obstacles and keep the process moving.
About the Author
CMO. MortgageLadder. Using the art and science behind marketing, I strive to deliver an enhanced brand experience to our users. My background as a data scientist allows me to make data-driven marketing decisions that support business growth. I’m fond of great books, fitness and sweets!