How to get a mortgage: 5 tips to improve your chances as a first-time buyer

How to get a mortgage: 5 tips to improve your chances as a first-time buyer
First-time buyers are faced with a whole host of challenges and fears when buying a home for the first time.

And one of the biggest is securing that all-important mortgage.

Borrowing a huge sum of money is, in itself, a daunting prospect.

But there are things first-timers can do to ensure they are prepared and well-positioned to breeze through the mortgage application process and move that step closer to owning a home...


How to get a mortgage as a first-time buyer

1. Spend time working out your budget

This is hugely important.

You wouldn't buy a car without knowing down to the penny how much you can afford to spend and property should be no different.

The best place to start is an online mortgage calculator, which will give you a clear guide on your borrowing potential.

All you need is your income and the calculator will let you know how much you could potentially borrow.

But remember, the mortgage application process is far more thorough and lenders will go through your finances with the finest toothed comb.

So...


2. Make sure your financial situation is in order

You've worked out your income and been through the online calculator process and established what you might be able to borrow.

That's a great start.

But if you have debt, your ability to borrow will be greatly affected.

If you are paying off a car loan or credit cards then your mortgage lender will take all of these payments into consideration before lending to you.

And this could really have an impact on your borrowing ability - in the worst cases, debt can mean no mortgage at all.

If you have debts, speak to an independent financial advisor, who will be able to suggest the best way forward.

Lenders will also scan over your credit history.

So, it can be a good idea to check this out yourself before applying for a mortgage.

Bad credit can be a sucker punch for mortgage seekers, but a poor credit report is not always down to huge debts as most people assume.

Make sure you are registered on the electoral roll where you live and if you have any credit or store card accounts open but you no longer use them, close them down!

If you are clearing debts or have a poor credit record, sometimes the best option is to postpone the property purchase and focus on getting your finances in better shape.

That way, you can revisit buying a property for the first time later on with a clean bill of financial health.


3. Boost your deposit

One of the biggest problems for the Millennial generation, forced into rental accommodation due to house price growth outpacing wages, is saving a large enough deposit to buy.

But it is a fact that a larger deposit means more choice on mortgages and often a lower rate of interest.

Lenders use a Loan to Value (LTV) calculation to assess how your borrowing figure sits against a property's purchase price.

And the lower your LTV, the less 'risk' in the eyes of the mortgage lender, meaning they are far more likely to lend to you.

A larger deposit will mean a lower LTV and, therefore, lower monthly mortgage repayments.

So it's in all first-time buyers' interests to raise as big a deposit as possible.


4. Avoid properties that scare lenders

We've already established that lenders will perform a forensic examination of your finances.

The other thing they take a great deal of interest in is the property you are buying.

From a lender's point of view, they want to know that, should you get into difficulty paying your mortgage, the value of the property you want to buy will cover the amount they are lending you.

Essentially, they want to be sure they'll get their money back.

With that in mind, lenders tend to get twitchy when buyers purchase 'odd' or 'unusual' homes.

By that we mean flats or apartments above commercial premises or old buildings constructed with non-standard building materials.

So, try to stick to traditional properties that are likely to at least hold their value when searching for your first home.


5. Organise your documents

The home-buying process involves paperwork. A lot of paperwork.

And a lot of it will need to come from you as the buyer.

When property sales are held up, which is never good, it's often down to a buyer or seller not being able to track down an elusive document.

So, before you apply for your mortgage make sure you have the following to hand:

  *  6-12 months of payslips
  *  Last two P60s
  *  6-12 months of bank statements
  *  Proof of identification (passport or driving licence)
  *  Proof of address (utility bill not older than three months)


Parkers can put you in touch with a mortgage advisor to help you to get a mortgage application accepted, get in touch with your local office for more information.