Before you begin searching for your dream home you should seek advice regarding your potential mortgage. This will give you a good idea of what you can afford and it will mean you can move quicker when you find somewhere you really like.
1. Use a mortgage broker
Not only will this save you hassle (you won’t have to check every lender yourself) but this will probably save you money. They will be able to recommend the cheapest and best deals for your available budget, and help prevent you making an application that could be rejected. This would adversely affect your credit score.
2. Manage your current account
You will need to give your lender copies of your bank statements for the last three to six months. You may need to tidy up your account in advance. Make sure here are no unpaid items, no regular deposits into online gambling accounts and that your rent is paid by direct debit instead of cash.
It goes without saying that if you’re not employed, you’re not getting a mortgage. However some will also refuse a mortgage if you have not been in a permanent job for at least twelve months. If you are still on a probationary period you could have trouble also. If you are in one of these situations your mortgage advisor may be able to advise you. If you are self-employed make sure you have the last three years’ accounts fully up to date.
4. What is your repayment capacity?
This is proof you can meet your future mortgage repayments. The best way to prove this is by showing you have saved, or paid rent, equal to the mortgage repayments plus 2 percent.
Traditionally lenders have multiplied salary by four to get the maximum mortgage that they will lend to borrowers. Now many households have two incomes so there is sometimes an option to either; 4x the main salary plus the second salary, or; add the two salaries together and use a slightly lower multiple (e.g. three rather than four). The income multiplier is used as an absolute maximum but the lender will perform an affordability test to decide just how much they are willing to lend.
You don’t need to have your deposit ready when you make your mortgage application. You can let them know you’re receiving a gift or however you’re going to obtain it and that will be fine.
If you are considering purchasing a new home and would like to discuss the legal process please give us a call on 02891 817715 or contact our property team by email email@example.com