Being a first-time home buyer means you are about to spend a hefty amount you have managed to accumulate in the past few years to get your first step on the never-ending property ladder. Having a decent idea about what you can afford to buy and how you can do it right the very first time is therefore very important. This article will guide you in the right direction for first time buyer mortgages!
Your mortgage is probably the biggest outgoing investment you are about to make. Getting it right the first time is therefore very important.
Taking a mortgage to your property means you are going to take out a fixed sum of money every single month to pay out the capital amount to your mortgage lender. The amount borrowed from your moneylender also goes out with an additional sum called interest.
How do you exactly get a first time buyer mortgage?
No matter how challenging and excruciating the process is, the mortgage is not a big deal. There are multiple steps that you are supposed to undergo when it comes to getting your share of the cake. These steps might even end up boosting your profile in the mortgage market.
While applying for a mortgage for the very first time, your money lender is going to assess your affordability. They will look at your finances, your annual income and other incomes or assets you possess. They will also assess your outgoing financer, which includes your other loan repayments, credit card repayments, bills, lifestyle expenses and much more!
Moreover, the mortgage lender is also capable of checking out your entire credit history to figure out whether or not you are a reliable source of mortgage repayment. Affordability assessment along with your past financial history will determine your capability of borrowing.
Every single mortgage provider comes along with a maximum loan-to-value, which they can offer you. This amount is the maximum which you can take out from them in order to invest in a new home. This can be a significant percentage of the entire property value.
To explain this further, if you are interested in buying a property that is valued at $200,000, and you are getting a mortgage help of about $170,000, your maximum loan-to-value would be about 85%. This way, you are also going to require a separate deposit of about $30,000, i.e. 15% of the total value of your property.
How do you get a better mortgage?
First-time buyers usually have a problem determining whether they will get a good deal on their mortgage value or not.
What is the biggest advice they can get?
To fix their deposit savings.
People usually say the better your credit profile is, the better your credit score is, the better will be your mortgage. But it is not true.
Yes, your credit profile matters. But what matters more is how much deposit can you accumulate.
Deposit is one of the major factors in getting the best mortgage deal for yourself.
The bigger your deposit, the better will be your rate. This way, your monthly repayments will be much smaller.
Up till a few years ago, borrowers got hefty deals and offers which added up to being brilliant advantages. They did not have to stump up a major monetary portion to get better mortgages. Today, this trend has changed altogether.
Trying to save up at least 10% of the total property cost is necessary to get a better mortgage. Some mortgage lenders do offer a great deal with just a 5% deposit as well, but having a bigger figure never hurts your case. Anything over a 10% deal will give you even better access to some of the best mortgage deals.
When should you start planning?
Starting to fix the deposit savings that will help you, later on, should start as early as possible. Any young person, looking forward to starting a family needs to start saving at least 10 years in advance to build a decent 10% and above deposit for owning a property in London.
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Improving your chances
Once you have finalized the property you wish to invest in, you will now be required to put in a formal application for your mortgage.
Of late, the criterion that involved mortgages and rates have changed altogether. In fact, they have become pretty strict today. Each mortgage lender will have a different set of criteria for offering you your deal.
There are multiple aspects that determine your chances of getting a secure mortgage:
- Having a good enough deposit
- Getting yourself on electoral rolls
- Canceling all your unused credit cards
- Building a decently good credit profile and history
- Having a stable job and a steady income
Your mortgage lender will take into consideration all these factors, including all your savings, incomes and bonuses, along with your outstanding loans, if any. They will take into account all the loans that require repayment on your end and your habitual spending habits as well as your other outgoing expenditures.
You will also be required to provide multiple documents so that your lender will have a proof that you are easily able to keep up with your repayments in the coming future. The documents will include your bills, your payslips and much more.
If you have been able to fulfill all the criteria mentioned by your mortgage lender, your offer shall be accepted and you will be a step closer to becoming the owner of the house you have always dreamt of.
Taking the help of a mortgage comparison tool available online can get you a good idea of what kind of deals and offers are available for you, as a first-time homebuyer. Entering your information into these tools can give you a precise value you will be getting from your loan from different sources.
It is always a great idea to compare all your loan sources since you don’t know what is available offline. There is always going to be something better in the market that you might not know.
Online comparison tools do not take into consideration your current financial records or your credit profile, however, these tools still give you a precise value. This is another great piece of advice for newbie home buyers looking to expand their future horizons in London.