Important pre-mortgage queries to think about
Before you undertake any signing of documents or parting with cash when it comes to buying your first house, there are some simple but important questions you need to ask yourself.
1. Have you saved enough?
The bigger your deposit, the better your choice of mortgages. Putting down 10% or more will give you a wider choice of lenders offering more competitive rates.
Additionally, lots of first-time buyers forget the ‘hidden’ costs of buying a home. You might have enough for a deposit but there are still search, survey, valuation, mortgage indemnity and legal fees to consider as well as the cost of moving house and furnishing your new place. You also need to factor in the cost of insuring your property as having buildings insurance will be a condition of your mortgage. You will also need protection against unforeseen life events that could impact your ability to continue paying the mortgage but this is not a condition of the mortgage.
2. Are you on the electoral role?
Being registered to vote is important for passing a lender’s credit score. By being on the electoral roll it can boost your credit score and your hopes of obtaining a mortgage.
3. Can you pass a credit score?
Check your credit file. Lenders will run checks before offering you a mortgage and won’t like to see lots of debt in your name. They will be happy to see a small amount that you have paid or are paying back to show that you can borrow responsibly. Make sure your credit file is correct and potential problems like unpaid bills are resolved prior to making a mortgage application. Did you know, an unpaid mobile phone bill is the most common reason for a first-time buyer failing a credit score? Get a copy of your file and ask your mortgage adviser to talk you through it.
If you have large credit card balances and hire-purchase agreements, pay as much off as you can. It’s also wise to make sure that your bank balance stays in credit for at least three months before you apply for a mortgage or at least within your authorised overdraft. Some lenders will be relatively relaxed about the odd dip into the red (particularly if you’re putting down a 10% or more deposit). Others will use it to refuse your loan application.
4. Do you meet a lender’s affordability criteria?
Affordability is the watchword for mortgages. Mortgage advisers and lenders are required by law to see documentary evidence such as bank statements and payslips to prove a borrower can make their monthly repayments. This applies to both now and in the event of interest rate rises where your monthly repayments could possibly increase if you have chosen a variable mortgage. Some lenders will give you more leeway on affordability than others.
Lenders will sometimes factor so-called ‘non-committed’ expenditure. If you have any TV subscriptions and gym memberships you don't use it will save you money and help your chances with an application if you get rid of them prior to applying for your mortgage. Be aware that any ‘buy now, pay later’ deals you take out for large purchases such as sofas will also go into the affordability calculations.
5. Is it worth asking the bank of mum and dad for help?
Many lenders will accept cash ‘gifts’ from parents or grandparents towards your deposit which will have to be declared. Some may offer a mortgage which allows your parents to put money in a specially designated savings account. This account will earn your parents interest and they give the lender security – helping you to secure a mortgage.
6. Have you spoken to a mortgage adviser?
Don’t think you need to have all your deposit and be absolutely ready to buy before speaking to a professional. Get advice a few months beforehand. A good mortgage adviser will go through your finances, look for problems such as gaps in income or long standing debts and suggest options to put you in the best possible position when the time is right to go looking for lenders.
If you’re interested in speaking to our expert Mortgage Protection advisers who will manage the whole process and help your mortgage complete on time, you can call Nottingham Mortgage Services on 0344 481 0013 or visit your local branch. Remember, your home may be repossessed if you do not keep up repayments on your mortgage.
Whole of market mortgage advice is provided by Nottingham Mortgage Services Ltd (NMS); an appointed representative of Quilter Mortgage Planning Ltd, which is authorised and regulated by the Financial Conduct Authority; registered No. 440718. NMS is a wholly owned subsidiary of Nottingham Building Society and registered in England and Wales, No. 03089887; Nottingham House, 3 Fulforth Street, Nottingham NG1 3DL.
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