First Time Buyers
Once you have made the exciting decision to buy your first home, there are several steps you can take to make the process a smoother one. In fact, you can give yourself a buying advantage by making sure you are in the strongest possible position. By taking the following steps and addressing these questions, you can buy with confidence:
- Check your credit file
- How much deposit do I need?
- Get mortgage advice
- Help to Buy
- What survey do I get?
- What documents will I need?
- Choosing a solicitor
- What are the costs?
- I’ve agreed on a price. What next?
Check your Credit File!
One of the main reasons buyers fail to get a mortgage is because of a poor credit file. Your credit file stretches back 6 years and records all payments you have made on time (or not) for all credit arrangements you have had. The main downfalls are defaults, CCJ’s and missed payments. Most lenders use Equifax or Experian when checking your credit file. Both these companies offer 30 day free trials, giving you complete access to the information. They also provide advice on how to improve your rating should there be any problems.
How much deposit do I need?
Prior to undertaking your first viewing, you will need to have started saving towards your deposit. The more deposit you put down the better the mortgage rate you can achieve and the easier it is to get the mortgage in the first instance.
Get mortgage advice!
Before you offer on a house it is vitally important that you know whether or not you can successfully apply for a mortgage. Factors such as your income, credit history, age, dependants, affordability and many others all contribute to whether or not a lender will lend to you and how much. As different lenders loan different amounts based on your information, they all have different criteria which mean one bank may refuse lending where another would not, it is important that you seek independent advice.
It also essential that as a buyer, you consider the importance and costs of protecting your mortgage against loss of income through job loss or health issues.
At Cardwells we can help you by introducing you to our independent financial advisors who will:
- Find the mortgage that best suits your circumstances by searching the whole of the market, in the process saving you money
- Help you budget by reviewing your current and future costs making sure that your purchase is affordable
- Explain and help you choose the right level of protection for your mortgage and lifestyle
- Be one point of contact through the entire mortgage process, as opposed to banks where it can be difficult to speak to the same person who originally advised you
First Time Buyers
First-time buyers can now get on the property ladder with a deposit as low as 5% under the new government backed help to buy scheme. The government is aiming to help more people make that first step and buy their own home, so there has never been a better time to buy your first house.
Help to Buy
Help to Buy is a new government-backed initiative set up to help first-time buyers and those looking to move up the property ladder, to purchase a property with as little as a 5% deposit.
Help to Buy is made up of two schemes:
- Equity Loan – available on new build properties
- Mortgage Guarantee – available on new build and existing properties
With a deposit of 5%, the Help to Buy Equity Loan scheme allows you to borrow an additional 20% of the purchase price of the property from the government; the loan is interest-free for the first 5 years.
What properties are included?
To qualify for the scheme, Help to Buy properties must be:
- Priced below £600,000
- Full ownership
- New build
- In England – this scheme currently excludes Wales and Scotland
The Government Equity Loan scheme is only available from approved, participating house builders, many of whom advertise on Rightmove.
Who is eligible?
To be eligible for a Help to Buy Equity Loan property, you must:
- Be able to demonstrate access to savings or funds to pay, if required, a deposit (which may be between 5% and 55% of the purchase price, legal fees, stamp duty and costs of moving)
- Be purchasing a property costing £600,000 or less
- Have a good credit history
- Take out any mortgage with a qualified lender (e.g. a bank or building society)
- Remove your name(s) from any other property deed prior to or at the point of completion of your new property if you are a homeowner wishing to buy a larger property for your family
This scheme will be available from January 2014.
If you’re looking to buy a residential property with as little as a 5% deposit, the Help to Buy Mortgage Guarantee scheme could help you purchase your dream home.
From January 2014, Mortgage Guarantee will aim to increase the availability of mortgages for buyers with small deposits. The Government will look to provide £12billion in guarantees, which could enable up to £130billion in higher loan-to-value mortgages (subject to the final scheme design).
The Help to Buy Mortgage Guarantee scheme is available:
- On both new build and previously owned properties up to £600,000 in value
- To first-time buyers and existing home-owners
- From January 2014 – further details will be provided by the Government
What documents do I need?
Throughout the buying process you will be asked for various documents by the solicitors, estate agents and brokers, it is as well to have these ready now. Below is a list of the most important and therefore the ones you are most likely to need:
- Passport/driving license card (photo ID)
- Utility bill/bank statement (proof of address)
- Bank statement showing cleared funds
- If the deposit is a gift from family you will need their proof of funds plus a letter confirming that the money is a gift and not a loan
Proof of income
- Latest 3 month’s payslips
- Up to 6 month’s bank statements
- If self-employed 2/r3 yrs certified accounts or 2/3 yrs SA302s (available from HRMC)
Choosing a solicitor
When choosing a solicitor there are many factors to consider. Firstly, prices can differ greatly and, though you often get what you pay for, it is sensible to be wary you are not being overcharged. For the smoothest possible sales transaction, it is our experience at Cardwells that suggests using a local solicitor is better. They have the essential local knowledge (meaning you should not have to pay for any unnecessary searches) and they also have the relationships with other local solicitors, estate agents and mortgage brokers, which ensures a better flow of communication helping the sale along. Our advice at Cardwells would be to speak to friends and family about solicitors they have used and take advice from your estate agent and broker. The more informed you are, the better decision you are likely to make.
What are the costs of buying a home?
This is an area your mortgage adviser will help you with immensely. There are several costs you would not have initially budgeted for and, though we cannot give you exact costs, we can point you in the direction of research.
- Mortgage arrangement fees
- Valuation fees
- Stamp Duty (link to stamp duty calculator below)
- Removal costs
- Building Insurance
- Solicitors fees + disbursements
- Stamp duty calculator www.moneyadviceservice.org.uk
I’ve agreed to a sale. What next?
The buying process does not end with an agreed offer. In many ways, this is only the beginning. Once you have agreed on the price, you need to apply for the mortgage and engage your solicitors.
We have offices in Bolton and Bury, with our areas of selling covering much of Lancashire. We have property for sale around the North West, including Manchester. We will be more than happy to help you with any aspect of the residential lettings experience, whether it’s simply just a bit of advice, or you’re a first-time buyer and aren’t sure what to do next. Call one of our branches (we also cover Walkden and Worsley) or pay us a visit to see exactly what we can do for you.