Buying Your First Home
Buying your first home will be one of the biggest decisions in our life. Once you have made the decision, you may want to speak to one of our advisors to check over your income and affordability to try and establish a budget for your new home.
We will then be able to provide you with a mortgage ‘approval in principle’ and a maximum budget so that you can start searching the market for a home.
Once you have viewed a property and decided you would like to make an offer, you may wish to speak to your advisor again to discuss the latest deals, rates and payments.
Once your offer is accepted, we will arrange a meeting with your advisor to start the mortgage application process and collect the required documentation.
The General Mortgage Process
The very first part of the mortgage process is a meeting (face to face or telephone) with your advisor. During this meeting they will tell you about themselves and our business. They will then take some time to find out about you, your circumstances, your income, your outgoings and your goals.
Your advisor will then spend some time sourcing a solution that matches you and your needs. You may also ask your advisor to provide you with an agreement in principle (mortgage in principle) which usually includes a lender credit and affordability check.
The agreement in principle can be supplied to estate agents as part of verifying your ability to purchase a property (usually called a financial qualification by estate agents).
Once you have found a property (purchases) or are ready to proceed (remortgages), another meeting will take place where your advisor will relay their findings, recommendation and reasons why. They will also at this stage require some documents such as ID, bank statements, pay slips (employed), tax calculations/accounts (self-employed & directors). If this is for a purchase, you would normally instruct a solicitor/conveyancer at this point too.
Your advisor will then check your documentation and apply to the agreed mortgage lender for you. The timescale from application to formal mortgage offer is usually 3 days – 2 weeks depending on the complexity of your application and the lenders workload at the time.
Once your mortgage is fully agreed, your mortgage offer is issued to you, your advisor and your solicitor.
Your solicitor will start or have started communications with the vendors solicitor to arrange contracts, queries and then finally arrange a completion date.
**New build homes are slightly different to this and may include a Help to Buy application too but do follow a very similar structure**
The mortgage deals
Before we help you choose a specific deal, you may want to understand more about what types of mortgage are available.
This brief (but not exhaustive) summary may help.
Common types of Mortgage;
- Variable rate – Your monthly payment fluctuates in line with a Standard Variable Rate (SVR) of interest, set by the lender. You probably won’t get penalised if you decide to change lenders and you may be able to repay additional amounts without penalty too. Many lenders won’t offer their standard variable rate to new borrowers.
- Tracker rate – Your monthly payment fluctuates in line with a rate that’s equal to, higher, or lower than a chosen Base Rate (usually the Bank of England Base Rate). The rate charged on the mortgage ‘tracks’ that rate, usually for a set period of two to three years. You may have to pay a penalty to leave your lender, especially during the tracker period. A tracker may suit you if you can afford to pay more when interest rates go up – and you’ll benefit when they go down. It’s not a good choice if your budget won’t stretch to higher monthly payments.
- Fixed rate – The rate stays the same, so your payments are set at a certain level for an agreed period. At the end of that period, the lender will usually switch you onto its SVR (see Variable rate). You may have to pay a penalty to leave your lender, especially during the fixed rate period. A fixed rate mortgage makes budgeting much easier because your payments will stay the same – even if interest rates go up. However, it also means you won’t benefit if rates go down.
- Discounted rate – Like a variable rate mortgage, your monthly payments can go up or down. However, you’ll get a discount on the lender’s SVR for a set period of time, after which you’ll usually switch to the full SVR. Discounted rate mortgages can give you a gentler start to your mortgage, at a time when money may be tight. However, you must be confident you can afford the payments when the discount ends and the rate increases
By far the most commonly used type of deal is fixed rates. Most commonly for either 2,3 or 5 years (others available).