12th Apr 2023|Sales|New Homes|

How To Get Your First Mortgage

Purchasing your first home is one of, if not the most important purchases of your entire life, making the process equal parts daunting and exciting. Unless you are a cash buyer, most first time buyers will require a mortgage to purchase their first home, meaning that they will have to go through a process to borrow funds from a verified lender such as a bank or building society. But what exactly happens when you want to obtain your first mortgage?

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Understand Your Credit Score

Your credit score will provide you with an insight into how likely you are to receive a mortgage offer from a lender. Your credit report will also be able to give you recommendations for how to improve your score so that you can obtain a more favourable mortgage with better interest rates, as an improved credit rating means that you will present less risk to your lender.

Gather Your Documentation

Before you visit a lender to apply for a mortgage, you should ensure that you have the following documentation to hand to expedite the process:

  • Passport or driving licence as personal identification
  • Bank statements for your current account for the last six months
  • A P60 from your employer
  • If you are self-employed, a tax return form SA302 and a statement of two to three years of accounts
  • Payslips from the past three months
  • Utility bills
  • Evidence of benefits received

Understanding Types Of Mortgage

There is no one standard mortgage option for first time buyers – in fact, there are a plethora of mortgage types for you to choose from. Here is a simple rundown of the most common mortgages that first time buyers use:

  • 95% mortgage: this allows a buyer to purchase a property by placing a deposit of 5%, and borrowing 95% of the property’s purchase value from the lender
  • Fixed rate mortgage: your monthly repayments within a specified period will remain fixed so you don’t need to worry about them increasing until the fixed term expires
  • Tracker mortgage: your monthly repayments will follow the base interest rate set out by the Bank of England meaning that they can increase or decrease month on month

Understanding First-Time Buyer Schemes

Prior to acquiring a mortgage, you should carry out research to see if you are eligible for funding or assistance through a first-time buyer scheme. This could drastically reduce the amount of money you may have to borrow from a lender, thereby altering the mortgage you require.

For example, shared ownership mortgages entitle you to part-buy, part-rent your property, which can drive the amount of money you require for a deposit down. Whilst you will have to borrow less money from your lender to pay for the share you purchase, it is also worth noting that you will have to take into account the significant portion of your income that will be designated to paying the rent to the relevant housing association.

Another option available for first time buyers is the First Homes Scheme. This scheme can provide considerable discounts of between 30 and 50% on eligible properties, meaning that first-time buyers will have to borrow less money from their lender in the long run, thereby making mortgages more accessible. Similar discounts are also available through the Right To Buy scheme, which allows tenants to purchase a property they have been renting for three or more years for a discount. Eligible properties will be purchasable for less than their market value, meaning that buyers will not have to take out as large a loan from their lender.

For more detailed information on which first-time buyer schemes are available, check out our latest blog.

Consult A Mortgage Advisor

Acquiring a mortgage can be a complex process, especially as there are so many options for first-time buyers to explore. This is why consulting a mortgage advisor can be helpful to many prospective homebuyers – they can provide personalised advice and recommendations regarding which mortgage to obtain, and how to improve your chances of being offered a more desirable mortgage. Some mortgage advisors may even be able to provide insight into exclusive deals, ensure you do not waste time applying for a mortgage you are ineligible for, and can expedite the bureaucracy surrounding mortgage paperwork.

Speaking To A Lender

A lender will be able to provide you with an agreement in principle – this is a simple process which can usually be completed online within fifteen minutes and will last between 30 and 60 days. This will help you understand your budget and whether you will be able to afford the property you have in mind, but does not constitute a formal mortgage offer. However, having an agreement in principle demonstrates to sellers and estate agents that you are a ready, willing and able buyer, which could act in your favour. Similarly, you can use mortgage calculators, which are typically available on your preferred lender’s website – this will provide you with an even quicker way to understand how much you could potentially borrow and afford.

Once you have had an offer accepted on your first home, you can begin the process of applying for a mortgage with your chosen lender by formally starting the borrowing process. For this, you will usually have to attend a branch for your bank or building society to provide the relevant documentation and discuss your borrowing needs in greater detail. After this, your lender may be in touch with you to discuss gaining access to the property you wish to purchase to carry out an independent valuation, or to inform you of any fees you may have to pay.

Once your lender is satisfied with their valuation and any fees have been paid, they will send the funds to your solicitor to pass over to the seller, and an estimated date for the completion of the sale can be discussed.

Looking For Your First Mortgage?

At Centrick, we provide a variety of properties – from modern new builds to character-filled resale homes, we’re sure to have a listing you’ll love. Our team of residential sales experts have been helping first time buyers find their perfect home for the last eighteen years, meaning that we are well versed in providing you with the support you need to make your first purchase a breeze. For more information on how to make your first time buying a home as easy as possible, check out the At Home With Centrick hub. Alternatively, fill out the form below and a member of our team will respond to any queries you may have shortly.

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