Considering your first home can be exciting but you will need to understand how the process works and arm yourself with accurate information before proceeding.
The mortgage process is handled by two parties – one is a mortgage lender, and the other is a mortgage servicer. A mortgage lender is generally a bank or financial facility which lends money to borrowers. A mortgage servicer takes care of the payment processing and sends the monthly statements out.
It is good practice to have an idea about the maximum amount you can borrow and follow this up with the decision in principle (DIP), also known as an agreement in principle (AIP). It will give you the information about how much you can borrow. When you have this information, you can begin to look for your ideal property.
Mortgage lenders generally support the Government’s Help to Buy Equity Loan Scheme, which can help the first-time buyer to buy a new build home through a shared equity scheme with as little as 5% deposit of their own.
The ‘bank of Mum and Dad’ was launched to help potential buyers take their first step on the property ladder and allows a family member to pledge the equity in their home or their savings as a security measure against the mortgage of the applicant – This is predominantly used by adult children who need support to buy their first home.
There are some things to keep in mind as you prepare for your first mortgage:
Ensure Everything Goes Through Your Bank Account – If you are applying for a mortgage, your lender will want to see all your incomings and outgoings to ensure that you are able to afford a mortgage. It is helpful to have everything in order for at least six months before you proceed with an application.
Save and Cut out Casual Spending – Save money wherever possible, in addition to the deposit on your new home you will need to cover other expenses as your mortgage progresses such as solicitor fees and stamp duty. Not only will cutting out unnecessary spending help you to save towards your new home it will also look better on paper and assure your lender that you are able to afford and continue to pay your mortgage
repayments. It is also worth paying off any existing credit cards or other high cost loans if you can.