Get purchase ready in 12 months - A first time buyers guide

If you are 12 months or more away from being ready to buy your first property you can set up a Lifetime ISA in which you can save up to £4,000 per year and receive a 25% bonus each year. This will help you to save your deposit much faster than a standard ISA only offering you 1% on your savings. A couple buying together can both use their LISA which would allow them to save £10,000 in 12 months, which is enough for a 5% deposit on a £200,000 property. 

There is a £4,000 per year saving limit and you must have had the LISA open for 12 months minimum. 

 

The electoral roll is the main method lenders can find where you live and where they will credit check you. So, make sure that your electoral roll is up to date so that the lenders can find you and correlate the credit agreements you hold at those registered address. Once they can find those credit agreements, they can check how you have managed those agreements to paint a picture of how you will manage your mortgage. 

 

One of the main reasons applicants are declined is due to adverse credit. By checking yoru credit report before you start looking at properties you can identify any incorrect informaiotn or adverse credit on your file that shouldn’t be there and have that corrected or removed in time for submitting mortgage in principles and applications. By identifying potential issues early, you can get these removed and have a clean report ready for applications. What is on your file is what is seen by lenders, so by providing your broker with an up-to-date credit report your application is more likely to go through smoothly as all the data on your application will match up with what is on your credit file. 

You can use our 30 day free trial through checkmyfile.com here: https://www.checkmyfile.com/?ref=jamesgreen20&cbap=1 Try it FREE for 30 days, then £14.99 a month - cancel online anytime. 

 

Having high amounts of personal debt such as credit cards, loans and car finance can cause lenders to turn you away. Many lenders use a debt-to-income ratio measure which measure the total amount of personal debt compared to your annual income. If you have more than 50% of your annual income in personal debt some lenders may decline to lend to you. So, aim to stay below this figure. Another measure lenders look at is credit limit utilisation. Ideally lenders like you to remain within 50% of your credit card limit as this shows good money management. So, if your usage is above 50%, use the time leading up to buying your first home to pay down some of your debt to get below that 50% threshold. 

 

Also, any money you spend each month on personal debt is money you cannot use towards your mortgage, so reducing the amount you spend on things like store cards and credit cards etc will free up more money to be spent on your mortgage, which in turn will allow you to borrow more and spend more on a mortgage. 

 

Checking your spending 3 months before your mortgage application can help you to avoid any potential decline with lenders. Some lenders may request your last 3 months of bank statements to ensure you are receiving the income you declared but also to see your spending habits. So, if you are building gup to a purchase, it would be a good idea to check your spending beforehand. The things to avoid in the run up to an application would be gambling, excessive overdraft usage and unexplained transactions. These can be red flags for lenders and may lead them to decline your application. 

 

When completing a mortgage in principle your adviser needs to see evidence of your income and proof of your ID, so having this ready for your initial appointment with your adviser will make the process much smoother. Once your adviser has all your information and documents, they can quickly move onto completing your mortgage in principle. The more information they have the more accurate your mortgage in principle and the stronger chance your application will subsequently be approved. The sooner you get your mortgage in principle the sooner you can view properties. 

 

When you make an offer on a property the estate agent is going to ask for your agreement in principle to prove you have been pre-approved for a mortgage. It makes sense to have this before you start looking for several reasons. The first being you will know how much you can afford to borrow as your adviser will have calculated this for you based on your income, outgoings, and deposit. You will have peace of mind knowing that you have been preapproved by at least one lender and when that perfect property comes along you have your agreement ready to give to the agent, so you don’t run the risk of missing out. Also having all your documents to hand when you make your offer can set you apart from other potential buyers as you look like a safer option compared to a buyer who doesn’t have anything in place yet. 

 

We recommend using a highly recommended and fully independent mortgage adviser who can give you advice to perfectly suit your needs, someone like us… So if you need any further informaiotn or a guiding hand to buying your first property please get in touch. 

 

01482 205084 

Info@greenandgreen.net