First Time Buyers Guide
A guide to mortgages for First Time Buyers Guide
First Time Buyers Guide
First Time Buyers Guide
A guide to mortgages for First Time Buyers
Buying your first home can be a daunting process. There are multiple parties to deal with, from estate agents to solicitors and mortgage lenders. At Principle Financial Services we understand how complex and time consuming it can be to get a mortgage, so we have produced this simple guide which covers key aspects of the mortgage process in an
easy-to-understand way. The guide will cover the costs involved, how it works with Principle and our top tips for getting approved, plus a short review from one of our very own first-time buyers so you don’t have to just take it from us when we say we know how to help.
Is Buying a Property Right for Me?
Buying your first home is a big responsibility. Property ownership and being on the property ladder is a great asset, you will own your own slice of the world and be able to call it home. The process of buying a house and getting a mortgage can seem complicated but it really isn’t.
Firstly, do your research, ask your friends and family how much they pay for council tax, gas and electric. How much would it cost you to furnish a 2 or 3-bed home. If you are currently living with parents, ask them how much it costs for food and essential household items per month. Does this all fit within your budget?
When you’re confident that you can afford to buy a property it’s important to understand how much you can borrow from a mortgage lender and how much deposit you would need. This is when you need to talk to an adviser. At Principle Financial Services we will talk you through how different deposit amounts can affect the interest rate available and the monthly cost comparison so you have an idea of how much you can potentially borrow according to your income and expenditure. As a rule of thumb, the bigger the deposit you have the lower the interest rate, although 5% and 10% deposit mortgages are available.
Once you have had an initial discussion with your mortgage adviser you are ready to hit Rightmove (other property platforms are available) and start exploring property in your desired area. First Time Buyers Guide
First Time Buyers Guide
How Much do I Need to Save?
The million-dollar question, what does it cost? There is more than just the property price to consider when buying a house. See below a list of costs and fees you will encounter:
1. Stamp Duty: A fee you pay to HM Revenue and Customs based on how much the property costs. First Time Buyers don’t pay any stamp duty on the first £425,000 of a main residential property.
2. Legal Fees: Your solicitor will need to carry out legal work and conveyancing for the purchase of your property. The costs will be broken down into searches, and legal fees. Ask a solicitor for a break down in their quote, budget for over £1000.
3. Valuation Fee: Some lenders will offer a free valuation for a new purchase. However, this will be for their own lending purposes and may not give much detail on other property aspects. Other valuations are available which give more detail such as a Homebuyers Survey (level 2) and Home Survey (level 3). For more information on these do get in touch with Principle Financial Services or your estate agent.
4. Arrangement Fee: The mortgage company may add an arrangement fee to your mortgage. Your adviser will talk you through the options, the costs and how they can be paid. They typically range from £499 and £1499.
5. Adviser fee: At Principle, we charge £495 for arranging and advising on your mortgage. The fee is only payable once we have received a mortgage offer that covers your requirements and pre agreed terms. Once a mortgage offer has been issued, the lender can only withdraw the offer if certain conditions are not satisfied.
What does the Principle Process look like?
At Principle Financial Services we make it our mission to deliver a quality service. We will always put you first so that you receive the most suitable, holistic advice. Although, at times, it might feel as though you are being interrogated, the questions we ask help us deliver mortgage advice suitable for your objectives and future aspirations. When you have found a property and are considering putting in an offer, we will arrange a meeting to complete a Fact Find. Here we will ask questions about your income and expenditure, study your bank statements, and consider your credit position. When we have finished gathering information we will move on to the next stage, research.
Researching the market is not just about finding a mortgage product but it is also about understanding and building relationships with reputable mortgage lenders. We have the tools, experience and expertise which allows us to navigate through the whole of the mortgage market.
Once we have completed our research, we discuss your case with the lender and then submit for a credit check. We then apply for a decision in principle, which is an initial agreement from the mortgage lender that they will be happy to lend based on the information you’ve provided and your credit score. The estate agent may ask for a copy of the decision in principle to register your interest. It is likely they will request proof of deposit and identification.
At our next meeting we will present our findings to you which includes discussing the key documents, interest rates, monthly payments, early repayment charges and of course any fees.
Once happy, we submit the application to the lender and they begin their underwriting process. This will include an assessment of your documentation, a valuation of the property and your credit check. We will also instruct solicitors to deal with the property purchase, whether it’s a purchase or a remortgage, having the right legal team on board is paramount to the process. The lender will then produce a mortgage offer and the solicitors will take over to move through to completion.
We will review the mortgage offer and recommended insurances before setting the completion date. On completion, your monthly mortgage payments will commence and your insurances will be in place. Be aware, from the moment you exchange contracts you become legally responsible for the property, therefore, we will ensure your home and lives are covered from this point.
Top tips
1. Boost your credit score, ensure your credit payments are up to date and you are on the electoral role at your current address. Take a free credit check to confirm your score.
2. Stay away from instant cash loans, payday loans, gambling sites and withdrawing cash on your credit card. These will all affect your ability to get a new mortgage whether you clear them in time or not.
3. Do your research. Think about what your future holds and plan a property purchase accordingly. If you think you’ll need 3 bedrooms, what does this look like in your area? If you are looking at flats or apartments, what are the additional costs such as ground rent and service charges for the building you like?
4. Use a whole of market adviser like Principle Financial Services! Making sure you have an expert on hand, someone who has access to the entire mortgage market is paramount, not only to getting the best deal, but receiving the best advice.
Thinking About Buying Your First Our Home?
At Principle Financial Services we are here to help you make your first step on the property ladder. Please do not hestitate to get in touch with us to see how our services can help you with your
SHANE FOX
01530 860190
The Springboard Business Centre, Mantle Lane, Coalville, Leicestershire, LE67 3DW
www.principlefinancialservices.co.uk info@principlefinancialservices.co.uk shanefox@principlefinancialservices.co.uk samhagon@principlefinancialservices.co.uk
PLEASE NOTE THE FOLLOWING
This guide is for general information and is not intended to address your personal and financial requirements and should not be deemed or treated as constituting financial advice. Nor does this guide constitute tax or legal advice and should not be relied upon as such. Tax treatment of investments and legal advice depends on the individual circumstances of each client and may be subject to change in the future. For further guidance on the matters discussed in this guide please speak to Shane Fox, who is a regulated financial adviser. Your home is at risk if you fail to keep up payments on your mortgage or any other loans secured against it.
Principle Financial Services Ltd is an Appointed Representative of New Leaf Distribution Ltd. who are authorised and regulated by the Financial Conduct Authority. Number 460421.
SAMANTHA HAGON