Many first-time buyers feel aggrieved with the difficulties of getting on the property ladder however; some rays of light have appeared recently.
There are more lenders and products available, especially at higher loan-to-values (LTVs) than there were last year, while mortgage rates are still at historically low levels.
Prepare for applying for a mortgage by making sure your documentation is in order. Lenders need to see:
- your last three years’ address history, with no gaps
- your last three months’ payslips and your last P60 form or three years’ accounts
- your last three months’ bank statements
- full details of any loans or credit cards you have
Providing this information on day one can speed up the process.
All lenders want to make sure they are lending money to someone who is highly likely to pay it back. It may be worth checking your credit score with a company like Experian or Equifax.
Simple things like paying all your credit cards on time and making sure you are on the electoral roll at your current address will help your credit score.
There are now many more mortgage products requiring a deposit of 5% of the property value, compared with just 24 last year.
Meanwhile the number of 90% mortgages has increased by about 1/3 in the past year.
These products are often similar to average rental payments.
Many lenders now work on affordability models, which means they will look at all your income, outgoings, age, number of dependants and other factors.
When buying a property to live in, the primary concern is that it is within your budget and will be a suitable home for you.
To make sure you have the best chance of buying a home, securing a mortgage “agreement in principle” (AIP) first is a good start.
This confirms in writing how much a lender will be prepared to lend you, subject to them checking the information given to them.
This AIP can then be used to confirm to the vendor your creditworthiness, and that you are a serious bidder.
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