First time buyers wanting to buy your own home and get on the property ladder but not knowing about the house buying process? This one’s for you! We also think some of you seasoned homeowners could benefit from reading this too, especially if you’re looking to move home before the stamp duty holiday comes to an end in April 2021.
After visiting every show home in your desired location or scrolling through page after page on Rightmove, there comes a point when you think, well, what house can I actually afford to buy? In it’s simplest form, the answer depends on two components.
- How much you have for a deposit
- How much a bank will lend you – the mortgage
The latter is where we come in as independent mortgage advisors. While you can complete online affordability calculators with different banks, this is a time-consuming process and they’ll all give you a different figure as they each have different criteria. As a first-time buyer, we appreciate this hardly fills you with confidence when you’re looking to make an offer on a property. A five-minute chat with someone who’s a professional in the industry can provide you with the reassurance you need to start the house buying process.
Once you’ve made an offer on a property, the estate agent or builder will ask you for a mortgage in principle (often called a decision/agreement in principle). This is to verify you’re financially viable and you can afford the offer you’ve made. A mortgage in principle is obtained from a mortgage lender and represents the first part of a mortgage application. It is an indication, not a guarantee, that the lender would be happy to give you a mortgage for the amount requested. Many first-time buyers think to go straight to their bank for this but, as mentioned earlier, each bank has different criteria and without knowing their criteria, you could be walking straight towards a declined mortgage in principle and a hard search on your credit report which can affect your future capability to obtain a mortgage! Sounds scary? Well, applying for a loan of thousands of pounds isn’t an everyday thing and care should be taken when doing so.
Just because one lender won’t give you a mortgage in principle, it doesn’t mean others won’t. Many lenders also only perform a soft credit search at the mortgage in principle stage and this can’t be seen by other lenders who will assess you in the future.
After placing an offer on a property, we will typically have a full mortgage appointment with you and collect the necessary documents which include payslips, bank statements and ID documents. This provides us with all the information we need to get you a shiny mortgage in principle which you can take back to the estate agent and use for other offers if you aren’t successful first time round. Once the estate agents have received this and providing the vendor (the person who’s selling the house) is happy to accept your offer, the property will be taken off the market and marked as Sold Subject to Contract – you’ve done it!
If you’ve already had your offer accepted as you’ve managed to get yourself an agreement in principle, it’s certainly still worth having a chat with us. The full mortgage application and legal work begins at this stage and we here to make sure you’re getting the best deal available and, more importantly, one that’s right for you.