Top five tips for First Time Buyers
Purchasing your first property can be daunting – it will most probably be one of the biggest financial commitments you will take on and can be a long road of confusion, stress and overwhelming information. We’ve put together our top five tips at London Finance Solutions to help make the process as smooth and stress-free as possible for you.
1. Do not rush.
Taking out a mortgage, especially for the first time is no process to be rushed. Take your time and do your research. At London Finance Solutions, we take pride in completing and going through each client’s personal fact find to find the best lenders, rates and products available, based on current situations as well as potential future plans. With the whole of the market at our finger-tips, we are able to gather the relevant information for the options available to you to work with you on which is best overall. This makes the whole process not only easier, but much more time-efficient for clients to review all of the options and finalise what deal they’d like to go ahead with.
2. Have your documents prepared and ready.
How much you are able to borrow from the lender is determined by your salary (single or joint), your expenditure and the size of your deposit. Getting an approximate idea of how much you can borrow is the first step, however to get an exact idea of lending and rates available to you, have your documents ready.
Employed individuals will need to provide payslips and P60 and self-employed will need latest two years accounts and SA302’s for each tax year. Bank statements are also required and most lenders will generally need the latest three months. Preparing your documents beforehand will give you a more accurate idea of what you can look to borrow. Please find below our checklist:
- Three months latest payslips and latest P60 (employed)
- Latest two years accounts and SA302’s for each year (self-employed)
- 3 months latest bank statements for all bank accounts held
- Proof of deposit
- Proof of identification (passport/driving licence)
- Proof of address (utility bill)
- Credit report (see point 3)
3. Your credit score
Your credit score can have a huge knock-on effect on your mortgage application, therefore it is incredibly important to check this regularly and understand your credit report. Credit score firms such as Experian, Credit Karma, Equifax etc provide a service which allows you to review and download your credit report. This in turn allows you to see any outstanding balances you have for loans, credit cards or other credit commitments in your name, how regularly and on time you make payments and provides information on any mis-payments or existing or settled CCJs in the last six years. By understanding your credit report, you will be more in control of how successful the mortgage application will be as you will be able to take the necessary steps to improve your credit score. In a nut-shell, your credit report allows lenders to see your past and present financial management of debt.
4. “What is a mortgage in principle and how do I get it?”
Ultimately, a mortgage in principle is exactly what it says on the tin – it is a document provided by the lender on the basis of information popped into the system however it is not a formal mortgage offer. You will still need to pass credit scoring and have the full application submitted once you have provided proof of income and affordability, along with any other criteria specific to the lender, however a mortgage in principle (also known as an agreement in principle or decision in principle) may strengthen your position when it comes to placing offers on properties, as it allows vendors and agents to see you are able to afford your offer in “principle”. At London Finance Solutions, we will obtain a mortgage in principle for you once we have received all documents, reviewed all options and decided on which lender and product to go with, as it is important not to submit too many mortgage in principles to avoid leaving a number of soft prints on your credit file.
5. Get the right advice
Sometimes, it may be difficult knowing who to go to initially – do you go directly to the bank or do you find a mortgage advisor. If so, who?
When starting your mortgage search, there is no rush or pressure. You can begin by approaching both a bank and a mortgage advisor directly in order to start having conversations and get the ball rolling. Many people do not have the time to approach all or even several banks therefore finding an advisor who is whole of market will save you the hassle. At London Finance Solutions, our whole of market advisors provide specialist knowledge and advice about the mortgage market and are highly qualified to advise you on which products are best suited to you and your situation. Going directly to the bank runs the risk of not choosing the best possible rate or product on the market. If for any reason the mortgage gets rejected due to lack of understanding or research of the lender and their criteria, it is also important to bear in mind that this will leave a mark on your credit report and can affect future applications.
We have specialist first-time buyer advisors who would be more than happy to assist.
Fill in our quick enquiry form here: Contact form
Call us on: 0208 427 5057