Improve your chances of first-timer buyer mortgage success.
If you are planning to buy your first property, one of the initial steps is to apply for a mortgage. This process requires an assessment of your creditworthiness by lenders. When they carry out their assessment, it will include an evaluation of your credit report which details all the information on how you have managed credit in the past, including late or missed repayments.
Many first-time buyers hope to make this year the year they get on the property ladder, thanks to the increasing availability of 95% mortgages. But while there are higher numbers of suitable mortgages available, there’s no guarantee you’ll be approved. To improve your chances, here are five of our top tips.
Sorry folks that I’m a bit late, unfortunately man-flu set me back a week or so, it’s that time of year!
It is also the time of year that we have a budget, formerly the Autumn statement and this time around it was largely unremarkable except for one headline grabbing titbit.
The abolishment of stamp duty for first time buyerswhere the purchase price is £300,000 or less. When buying above £300,000 to £500,000 the normal rules apply but they still don’t have to pay on the first £300,000. Above £500k all bets are off and you are back to the same rules as the rest of us.
With the average house price in Surrey currently standing at £343,289, stamp duty is now £2,164 for a property at that price for first time buyers, saving around £5,000 on the ‘average’ Surrey home.
Personally I think it is a good idea, anything that helps first time buyers has got to be a good thing. However I have spotted a negative comment, The Guardian’s Andrew Sparrow said:
“True, the Office for Budget Responsibility has exposed his main headline-grabbing measure, the abolition of stamp duty for first-time buyers for homes worth up to £300,000, as a £600m gimmick that will just push up prices. But, even though it would be nice to live in a world where bad policy always amounts to bad politics, sadly we don’t, and it is hard to see Hammond suffering any penalty for his home owner subsidy (apart from when he realises he has not got £600m to spend on something else). The Tory tribe (MPs and newspapers) will never complain about a tax cut, and it is not a measure that will be voted down in the Commons. (For example, we can’t even be sure Labour will vote against it.)”
Reading between the lines the Guardian rarely agree with anything the Tories do, so I’m going to take the comment with a pinch of salt.
Although I take the point that potentially house prices could be pushed up I feel that the amount of first time buyers that this will encourage is likely to have a minimal effect on the market as a whole. What it does do is give a helping hand to those who have made the effort to save up a deposit and it is a saving they can put towards their new home.
Policing this could well be difficult. Presumably the responsibility for checking the land registry records will be down to the conveyancing solicitor? The government notes on the plan do not give any guidance on this.
Another point to note is that for joint purchases, both parties need to be first time buyers.
What should have more of an effect on the housing market is the promise to build 300,000 homes a year with support for the house building industry and investment in infrastructure. Five new “Garden Towns” to be built as part of this initiative. Sounds great, not sure where the money is coming from or where they are going to build stuff but I’m sure the boffins in Whitehall have got a cunning plan! Locally the plan to develop an 1800 home settlement at Dunsfold has been approved so I guess a few of these up and down the country will be part of the plan. I do recall this being in the pipeline for quite a few years though, and as far as I am aware no bricks have been laid yet.
So my conclusion, some headline grabbing policies but only time will tell if they will work and, in the case of the housebuilding, rather a long time.
If you’re a first time buyer looking to buy a property in Surrey or elsewhere and need mortgage advice, please get in touch. Call us on 01252 759233 or email info@thesurreymortgagebroker.co.uk.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
If you are looking to purchase a property and need a mortgage to do so, your lender will require a lender’s valuation.
House buying has all sorts of jargon and terminology wrapped up in the processes, so it’s important to know what all of them are really about. Here’s what you need to know about your lender’s mortgage valuation, and how it affects you as a buyer.
The mortgage valuation report gives your lender some independent confirmation of the value of your property, to ensure their investment is well placed.
The valuation will also tell the lender if there are any major problems with the property which could affect its value. It will check the prices of similar properties in the local area, and that your property is not one of a type which they will not lend against, such as those in a high flood risk area.
Your lender probably already has a relationship with a surveyor, and will contact them themselves to arrange a suitable date for the survey. In most cases, this will take place within two weeks of your mortgage application.
The valuation surveyor will visit your prospective property, and will inspect for condition and any major problems. This whole process will take only 15 – 30 minutes and will only usually pick up on obvious, visible problems. Their report back to your lender is short, just two or three pages usually, and although you may receive a copy of it, it’s not particularly beneficial to you.
What is the valuation fee on a mortgage?
Typically this will cost between £150 and £1,500 depending on the value of the property you are buying. Normally you, the buyer, will pay the fees for this valuation, this can be an upfront cost or added to the term of your mortgage. In some cases, lenders may waive these fees as part of a package of offers for you, but this varies from lender to lender. Check your mortgage terms and conditions early on, or ask your lender about survey fees, to make sure you know what you’re responsible for.
The mortgage valuation is commissioned by your lender, and is conducted for their benefit, not yours. The inspection is too brief and too standardised to really provide any insight into the condition or true value of the house. While you can certainly expect to receive a copy of the valuation report, or at least an excerpt of it, you should not rely on this to inform any offers you make or your purchasing decision.
In order to be fully informed about the condition of the property you’re considering purchasing, you will need to commission your own homebuyers survey. This is usually done through an RICS surveyor, who you can find on the RICS website.
You have a choice of survey types available to you, to suit your needs as you see fit. These include:
The RICS condition report: The most basic report available, this is a quick, easy way to ensure everything is OK. It’s most suitable for relatively new properties.
The RCIS homebuyers report: A more detailed report, this will take around two to four hours to take place, and includes advice on any repairs or maintenance issues with the property.
The SAVA Home Condition Survey: This covers pretty much all the things the RCIS homebuyers report would cover, but without any market valuation included.
The RCIS building survey: This is the most thorough survey you can get, this is an ideal choice if you are buying a period property or something which needs a lot of work. It’s also a good choice for homes of a non-standard construction, and will generally take around a day to complete.
New build snagging survey: in addition to these survey types, if you are looking to buy a brand-new property, you can have a quick and inexpensive ‘snagging survey’ done. This flags up any defects, cosmetic issues and other problems, so that your contractor can rectify these issues before you move in.
Whatever your property valuation has said, you should always instruct your own thorough survey in order to ensure you are not hit with any nasty surprises later down the line.
If you’re ready to explore different mortgages and find one that’s right for you, give me a call. I’d be delighted to talk you through your options. Call 01252 759233 or email richard@thesurreymortgagebroker.co.uk
Getting a mortgage when you’re a first time buyer is tough. Changes to the lending criteria following the economic crash in 2008 has made it hard for first time buyers to secure a mortgage, and has called upon them for very large deposits too.
Figures from Halifax suggest that the average deposit has now risen to around £33,000, 13 per cent higher than the average last year. The number of first time buyers has decreased slightly too, despite schemes like the governments ‘Help to Buy’ which specifically targets this group of buyers.
If you’re looking to get your foot on the first rung of the property ladder, you should make sure you’re well prepared for what’s to come. Here are some of the most common mistakes made by first time buyers, and what you can do to avoid them.
You didn’t check your credit report
Having a good credit score will open the door to many more mortgage offers and deals. Find yours out by getting a copy of your report, and ensuring everything on these is factually correct. More on credit scores here.
You’ve made an offer without an agreement in principle
You may well have found your dream home, but without an agreement in principle from your mortgage provider, there’s no point in making an offer. Get your mortgage sorted first, and ask your lender for an ‘agreement in principle’ which will give you the confidence and the backing to really leverage your offer.
You bought a flat with a short lease
If you’re buying a leasehold flat, you could be in trouble if the lease is shorter than 80 years. You may struggle to get a mortgage and, if you do get one, you may struggle to sell the property later on. Try and get the lease extended before purchase, and if you can’t or the seller won’t do this, negotiate your offer in lieu of the short lease.
You didn’t realise how expensive this would be
There are all sorts of costs, fees and charges associated with buying a house, so don’t assume that all you need to worry about is the deposit. From stamp duty to legal fees, it all adds up. Take some time to figure out all the associated costs of moving to get a clearer idea on what you need to pay.
You chose the wrong mortgage
With so many mortgages to choose from, it can be difficult to know if you’re getting the best deal or not. Often the variable rates seem cheaper on the surface than a fixed rate offer, but remember you’ll end up making much higher payments when interest rates rise again. Make sure you’ve compared all the offers available to you, and that you understand how different types of mortgages work. In short do your research and if you are unsure then take advice.
Getting a mortgage as a first-time buyer shouldn’t be a complete nightmare. With some forward planning and awareness of the pitfalls, you should be able to get a good deal.
However if you need some help speak to a mortgage broker or financial advisor. We can help you get in better financial shape to get the best deals, and also have access to mortgage products that are not easy to find on the high street or online.
Give me a call if you would like to chat about your options.
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