Buying your first home is one of the biggest steps you’ll take in life. Whilst it’s incredibly exciting, it can also be overwhelming taking your first step onto the property ladder and with all the banking jargon and endless mortgage options available, how do you decide what’s best for you?
Luckily, with the right help, applying for your first mortgage can be straightforward and there are a range of deals available for first-time buyers. Here at TaylorMade, we thought it might be helpful to put together a step-by-step guide for homebuyers, in particular, first-time buyers who may find this first-time mortgage journey overwhelming. And since we are an independent mortgage advisor in Manchester, we paid particular attention to this specific area.
What is a First Time Buyer Mortgage?
First-time buyer mortgages are mortgages specifically designed and aimed at those just entering the housing market. Some companies offering first-time buyer mortgages may offer incentives such as cashback schemes, to try and entice you to choose them over the competition.
Although strict affordability criteria are needed, as with any other mortgage, for first-time buyers they may offer a 95% or 100% mortgage which requires only a very small 5% deposit, or none at all.
A Guide for Homebuyers from an Expert Mortgage Advisor in Manchester.
Step 1 - Assess Your Finances.Evaluating your financial situation is a crucial first step into gaining a first-time buyer mortgage. Conducting a self-assessment will give you a clearer understanding of your income, expenses, and existing debts, helping you to determine how much you can realistically borrow.
Step 2 - Check Your Credit Score.Your credit score plays a pivotal role in the mortgage approval process and lenders use this score to assess your creditworthiness. Obtain a copy of your credit report and address any issues that may negatively impact your score. A higher credit score often leads to more favourable mortgage terms.
Step 3 - Set a Realistic Budget.Once you have a clear picture of your finances and creditworthiness, set a realistic budget for your home purchase. Consider factors like deposit, closing costs, and monthly mortgage payments. This budget will guide your property search and help you avoid homes that are beyond your financial reach.
Step 4 - Save for a Deposit.Most mortgage lenders require a deposit, typically ranging from 5% to 20% of the property's purchase price. Start saving early to ensure you have a substantial deposit, as this not only improves your chances of mortgage approval but also reduces your overall loan amount. There are various options available if you’re looking for a first-time buyer mortgage, including very small deposits of 5% and even 100% mortgages, which allows you to get a mortgage without a deposit. There is a strict set of criteria needed for these types of mortgages.
Step 5 – How Much Can You Borrow?To ensure you have access to the best deals on the market, it is highly advisable to use a mortgage advisor who knows the mortgage market like the back of their hand. By using a mortgage broker in Manchester, you can compare hundreds of mortgage deals in the area and identify the best one for you, rather than restricting yourself to just a handful of mortgage products from one lender. Also, by seeking the help of a broker, you can identify the lenders most likely to give you the funds you need, without risking rejection.
Step 5 - Research Mortgage Options.If you’re looking for a first-time buyer mortgage or any other mortgage from a mortgage advisor in Manchester, then understanding the options open to you is paramount. Your mortgage broker should cover factors such as interest rates, repayment terms, and any special programs or incentives.
Step 6 – Apply for a Mortgage in Principle.This is a document that indicates how much a particular lender is likely to give you based on your current financial circumstances. This document won’t guarantee that you’ll be able to borrow the money you need, but you can use it when house hunting to prove to sellers and/or developers that you’re in a good position financially.
Step 7 - Apply for your Mortgage.Once you find your property and have decided to proceed with the purchase, it’s time to reserve and apply for your mortgage. At this stage, the lender will take a more thorough look at your finances than they did during the mortgage in principle stage. You’ll need to show proof of income along with evidence of your deposit, or, if you’re self-employed, you may face even more checks and will be expected to show proof of income for the last two to four years.
Step 8 - Application Processing.This stage can take some time. Once you’ve submitted your application, you may have to wait for it to be processed, which can take anywhere from a few days to several weeks. Not only will the lender investigate your finances, but they’ll also assess the property that you wish to buy, checking if it’s worth the amount that they’re lending you.
Step 9 - Accepting your Formal Mortgage Offer.After your lender is finished with his investigations and checks, they’ll get in touch to let you know their final loan offer. When accompanied with your deposit, this loan should hopefully be enough to purchase the property and, if so, you can proceed with the purchase. There is a possibility of the lender offering less than you need, in which case you would have to negotiate the price of the property down with the sellers. If the sellers refuse to drop their price, maybe you need to look elsewhere for a different property. If you decide not to proceed with the sale, the lender may reassess their original offer, although they’re under no obligation to honour their original offer if you decide to purchase a different property.
Step 10 - Exchanging Contracts.Once you’ve got your mortgage in place, it’s time to exchange contracts with the seller or developer. Your conveyancing solicitor will help you with this process and at this stage you’ll also be given a completion date which indicates when you can move in.
TaylorMade: A Specialist, Independent Mortgage Broker in Manchester.
TaylorMade are an independent mortgage broker in Manchester, we have access to the best deals on the market today, whether you are looking to buy in Manchester or further afield, you’re after a first-time buyer mortgage or you’ve been on the property ladder a while. Our team can help you from the initial mortgage application right through to the exchange of contracts and completion of the sale. We’ll oversee the entire process, guiding you through each step whilst saving you precious time, stress, and money.
Get in touch today to speak to one of our friendly helpful advisors.
