In the ever-evolving landscape of the property market, there's exciting news on the cards for first-time buyers. With a projected 16% increase in first-time buyer mortgage lending in 2024, and house prices on a downward trend coupled with reduced lender rates, the horizon seems brighter for those looking to step onto the property ladder.
The crucial role of an independent mortgage broker
Embarking on the journey to apply for a mortgage as a first time buyer is an exciting but often anxious time. Navigating today’s mortgage market has become increasingly complex. According to Moneyfacts’ latest UK Mortgage Trends Treasury Report, there are now 5,338 mortgage products on offer for borrowers in the UK. This is where a mortgage broker becomes your indispensable ally. Beyond being a mere intermediary, a mortgage broker is your guide through the intricacies of today's dynamic mortgage market, offering essential specialist mortgage advice.
Be prepared for the mortgage process
Before engaging in conversations with a mortgage broker, take the time to organise your financial documentation. Having these documents readily available streamlines the application process and allows your mortgage broker to provide more accurate guidance. Be prepared to present proof of income, employment history, tax returns, and information about your assets and liabilities. This proactive approach not only speeds up the initial stages of the first time buyer mortgage process, but it sets the foundation for a more informed discussion about your mortgage options and offers the potential to save you hundreds.
Get credit rating savvy
Now is the time to check your credit rating and make improvements where possible. A strong credit score can positively impact the terms of your mortgage, potentially leading to lower interest rates and more favourable terms.
If you don’t know what your credit rating score is, then you can check it here. Our free guide to improving your credit score contains some super easy tips to help make quick improvements and is a must read for any first time buyer.
Start conversations early on
By involving a mortgage broker from the outset, you benefit from their guidance in setting a realistic budget and understanding your financial capacity. Early engagement allows the broker to assess your unique financial profile and using their industry knowledge to match you with the most suitable mortgage options. This tailored approach ensures that you make decisions aligned with both your short-term and long-term financial goals. Establishing this connection in advance ensures that you are well-prepared for subsequent stages, such as the exchange of contracts, and provides a smoother transition through the entire process.
Access to a broad network of lenders
Unlike traditional lending institutions, many mortgage brokers aren't confined to a single source. They have access to a diverse network of lenders, including those that might not be on your radar. This expansive reach increases the likelihood of finding a mortgage with favourable terms and competitive rates, giving you broader mortgage choices.
Guidance beyond the mortgage application process
While the mortgage application process is a significant part of a mortgage broker's role, it extends far beyond. They serve as a constant support system, offering guidance on the intricacies of mortgage terms, interest rates, and potential changes in the market. This ongoing assistance ensures that you remain well-informed at every stage of your first time buyer journey.
Exchange of contracts
As you progress in your first time mortgage application, understanding the exchange of contracts is pivotal. This phase marks a crucial step towards homeownership and involves several key elements.
Formalising the agreement
The exchange of contracts is essentially the formalisation of the property purchase agreement. At this point, you and the seller legally commit to the transaction. Your solicitor and the seller's solicitor exchange signed contracts, solidifying the terms of the deal.
Payment of deposit
Simultaneously with the exchange of contracts, you'll be required to pay a deposit. This is typically a percentage of the property's purchase price and serves as a demonstration of your commitment to the purchase. The deposit is held in escrow until the completion of the transaction.
Setting the completion date
The exchange of contracts also establishes the completion date, the day when you officially become the legal owner of the property. This date is agreed upon by both parties and allows you to plan for the transition to your new home.
Associated costs during the exchange of contracts
Understanding the financial aspects during this phase is crucial. Alongside your deposit, there are additional costs to consider:
Legal fees
Both parties involved will incur legal fees for the conveyancing process. These fees cover the solicitors' services in handling the legal aspects of the property transfer.
Stamp duty
Depending on the property's purchase price, you may be liable to pay Stamp Duty Land Tax. This is a government tax, and the amount varies based on the property value
Search fees
Your solicitor will conduct various searches to ensure there are no legal issues or potential problems with the property. These searches may incur additional fees.
Talk to Tony
By speaking with our independent mortgage advisor, Tony, 6-9 months before you are looking to apply for a first time buyer mortgage, you're gaining a trusted advisor for your entire first time buyer mortgage journey.
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The amount will depend on your circumstances.
Skyline Mortgage Consultants Limited is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Skyline Mortgage Consultants LTD registered in England and Wales Number 8157062. Company Registered Office: Heathmans House, 19 Heathmans Road, London SW6 4TJ