#TuesdayTips - help first-time buyers get on the property ladder
Lovell and sister company, Muse Developments are helping potential first-time buyers looking to take that first step onto the property ladder by offering a range of advice and tips on securing a mortgage.
When applying for a mortgage, especially for new build properties, it’s important to be as organised as possible prior to applying. Banks will scrutinise applications now more than ever before due to the mortgage market review. Documents which lenders usually ask for include:
Proof of address (dated in the last three months)
Last three months’ payslips and bank statements
Proof of deposit
Latest P60 tax form (showing income and tax paid from each tax year)
Improving your credit score
Use credit – many people think this means carrying a balance on a credit card each month, which is not the case. You must prove that you can handle credit responsibly. For example, if you have a credit limit of £2000 and you only spend say £150, but pay it all back in full each month looks much better than having a credit card with a £2000 limit and the balance is £1950 and you only make the minimum payment each month.
Ensuring you are registered on the electoral roll will increase your credit score. Lenders will use it to help verify who you are.
Check your payslips before you apply for a mortgage. When a lender asks for your basic income, only tell them your basic income. The additional incomes all need to be broken down. Different lenders will treat each income in a different way.
Get a decision in principle before you even offer or reserve a property
Ensure you can get a mortgage and also take the time to understand mortgages before you reserve or offer on a property. Once you reserve or offer, things can move very quickly. On a new build property, you will usually have to exchange contracts within four weeks, in this time the property will be valued by a surveyor and the mortgage offered to enable the exchange of contracts.
Save for a deposit and understand your costs
Many mortgage lenders require you to have a deposit of at least 10%, and charge anyone with less than 25% of a property’s value to put down significantly higher interest rates. There are many different fees you need to consider when purchasing a property from survey costs to stamp duty.
Cut back on spending
Lenders will ask for a lot of detail about your outgoings so it’s worth tightening up on your spending the run-up to buying your first home.
Check out government schemes
Government schemes such as Help to Buy could be hugely beneficial if you are able to take advantage of these.