First Time Buyer
The key thing about a house is how much you can afford to borrow, and how much you can afford to repay per month. It’s a good idea to sit down and work out a budget before visiting us. Traditionally lenders used income multiples to calculate how much could be lent. Typically someone on £25,000 could borrow four times income, being £100,000.
However, this is no longer the case. Many lenders now use affordability and DTIR (debt to income ratios). This can significantly increase borrowing potential, especially with joint applications. This can also vary considerably depredating on the size of the deposit you have.
This is where the advice of an independent broker is paramount. We will effectively review every potential lender to find the most suitable product for you. We will obtain an “agreement in principle” meaning the lender has agreed to lend the money subject to finding a suitable property. Some people trawl around the high street thinking they will get the best deal, but can you realistically visit over 150 lenders? Many lenders have different, more competitive deals through brokers than they offer in their branches. The decision to go your existing bank or building society could cost you thousands more than you need to pay over a typical twenty five year mortgage.
The other things to consider are the costs associated with buying a house, and many people forget this when looking to buy. If you are applying for a mortgage you may have to pay a valuation fee. This is dependent on the lender, the purchase price and the level of valuation you have. There are also legal fees and stamp duty. Typically you will have to pay stamp duty, which is collected by the conveyancer, as follows:-
| Purchase Price | Stamp Duty |
| £0- £175,000 | 0% |
| £175,001 - £250,000 | 1% |
| £250,001 - £500,000 | 3% |
| £500,001 + | 4% |
Only once you are confident that it is affordable and you have a mortgage “agreed in principle” should you look for a property. Many agents will offer you financial advice, but you need to remember that they are representing the person selling the property (the vendor) and not the purchaser
Once you’ve found the house you want, make an offer, usually through the estate agent. Don’t be afraid to go low and be prepared to negotiate. If your offer is accepted, ask them to take the property off the market.
Next you need to instruct a solicitor, which we can help you with as we have built strong relationships with reputable solicitors. We then complete the mortgage application and pay any fees to the lender. At this point you need to decide what level of valuation of you require. There are three options with most lenders:-
Basic valuation for mortgage purposes. This does not give you any guarantee of the property condition. It is to all intense purposes a valuation for the lenders benefit only.
Homebuyers survey the recommended option. This gives you more information and highlights any potential issues. It gives you bargaining power if any issues are found.
Full structural survey. Usually only done when there are serious issues picked up by one of the other reports.
Needless to say as the type of report escalates so does the cost involved.
