If you’re looking at becoming a First-Time Buyer and made the decision to move home, your first step is saving for your deposit (or receiving Gifted Deposit from the “Bank of Mum & Dad”. Once you’ve done that, what comes next? Put simply, it’s time to get prepared.
In our professional opinion, we highly suggest speaking to an experienced Right-to-Buy Mortgage Broker as early on in your mortgage process as you can, so you have a rough idea of how much you can borrow for a mortgage and how much it will all cost.
Getting yourself an up to date credit report should also be one of the main things you prioritise. The last thing you need is any past disputes with someone like a mobile phone provider to prevent you from buying a home. Taking the above steps will give you a realistic expectation of your possibility of successfully owning a home and the budget you could have.
As an experienced mortgage advisor in Newcastle, we will be able to obtain a fully credit-checked Agreement in Principle on your behalf. Your contribution to this process will be proving who you are, where you live and how much you earn. There is a lot of paperwork for you to get together, so it’s ideal for you to open a file for yourself and start collecting everything ahead of time.
Regarding proving who you are, you’ll need to provide some photo ID such as a Driving license or passport.
You will also need to prove where you live. This can be done with either a utility bill or original bank statement dated within the last 3 months.
Reviewing your spending habits has become one of the most crucial determining factors in whether or not you’ll qualify for a mortgage. Your bank statements should show proof of your income and regular expenditures.
Lenders will be displeased if they see gambling transactions on your account. They will also not be happy if you go over an agreed overdraft limit or if your direct debits bounce on a regular basis.
You will need to provide evidence that you have the funds in place for the deposit and also evidence this for anti-money laundering purposes. We recommend that you try to not to move money around your various accounts too much as it will make it difficult to evidence the audit trail. Lenders like to see your savings building up so you’ll need to account for any large credits into your accounts.
Quite often we find that a deposit has been gifted by a member of the customers family. These funds need to be evidenced also and the “donor” will need to sign a letter to confirm that it’s a non-refundable gift, not a loan.
In terms of affordability, the key thing is to be able to prove your income. If you are employed, this tends to be by way of your last 3 months’ payslips and most recent P60. Lenders can take into account consistent overtime, commission, shift allowance and bonus.
If you are self-employed then you’ll need help from your accountant. This will be to request your last 2 or 3 years’ SA302 documents from the Revenue. Following that, they will get the accompanying tax year overview.
It’s smart to do your homework. Write down an estimate of how much your costs may be after you move house. You can work out an idea of how much the council tax and utility bills will be. On top of that, you can work out your regular spendings, such as food and drink. This will show the lender how much disposable income you have available to pay your mortgage from.
As you can see, it’s a real paper trail when you are applying for a mortgage. That being said, if you want your application to run like clockwork you’ll need to put in the work. It’s better to get all this out of the way and prepare well in advance, to save both time and frustration later down the line.