Are you ready to buy a home?
Have you spoken to your bank or mortgage broker?
Speaking to your bank may give you a very basic idea of what you can borrow but it will limit you to only what that bank can offer. A whole of market broker (like Ideal) can give you a range of options and solutions for straight forward and not so straight forward scenarios. Different lenders/banks have different products, criteria and affordability calculators. It makes sense to take a wider view of what is available to you.
Have you got all your documents ready?
Get a mortgage folder set up on your desktop, laptop or tablet. Update that with your last 3 months payslips, latest P60, last 3 months bank statements, passport and deposit proof. For bank statements make sure the address your bank has is correct and not an old family home. Also make sure you can download the full statement, not a transaction list. Deposit proofs can be tricky as some lenders may only produce an annual statement but normally if you can request a more up to date version by contacting your bank.
If you are self-employed you will need your last 3 months business bank statements (if you have one), last 3 years Tax Calculations with matching Tax Overviews and last 2 years accounts (if you use an accountant). If you have taken any grants or loans from the government you should be able to list these
Having these documents to hand will save time and stress later on
Do you know what you can afford?
You need to understand how much you can afford per month and how much can be lent by a bank or building society before you start looking for a new home.
Go through your bank statements to see what your typical outgoings are. If you live with your parents you may want to speak to them to get an idea of regular household costs such as – Council Tax, Water rates, Gas/Electric, insurances and groceries.
The amount you can borrow will depend on the lender as well as age, deposit size, income level, outgoings (including all debts), and any financial dependents. Once you know how much you can borrow it will be easier to find properties within your range
Are you aware of your credit score?
As long as you have not missed any payments for a credit agreement you are normally ok. However, the agencies who report on your credit do make mistakes so taking a look at your report to make sure addresses and credit commitments match is a good idea. If the information the credit agency has is different to what you tell the broker/mortgage lender, your application could be declined
Do you have an agreement in Principle?
This is not mandatory to make an offer on a property, but some people feel more comfortable having one in place. Do remember though, the agreement is generated by a computer and does not guarantee a mortgage application will be agreed or if you even fit that lender’s criteria. Also, these agreements typically last for 60-90 days and are based with one specific lender. Maybe the lender had the best available rate at the time of the credit score but this might have changed now
Do you have a solicitor lined up?
You should get an idea of the costs for using a solicitor and see if any friends or family have used a solicitor they would refer you to. However, be careful as not all lenders can accept all solicitors. It is best to get a couple of quotes and then pick the appropriate firm once it has been confirmed they are able to work alongside your chosen lender. At Ideal Mortgage Advisers we have a large panel of solicitors we can refer you to if required.
In short, get your ducks in a row.
Your home may be repossessed if you do not keep up with repayments on your mortgage