First Time Buyer
When applying as a first time buyer there are certain lending criteria that you need to be aware of.
Borrowing limits are generally at 3.5 times your gross annual earned income.
You will need 10% deposit plus around an additional 2% to cover stamp duty and solicitor fees.
What documents do you need?
- Photo ID: such as a valid passport or driving licence
- Proof of your current address: such as a household bill in your name
- Proof of your income: your latest P60 and at least three recent salary slips
- Evidence of how you manage your money: bring current account and loan account statements
What is your application based on?
When you apply for a mortgage, a lender will look at:
Your income – lenders will look at your annual income and some may take bonuses or overtime into account. Some lenders may factor in rental income if you plan to rent out spare rooms
Your age and number of years left until you retire
Outstanding loans – if you have other loans, this may reduce the amount of money you can borrow or you may find it difficult to get a mortgage
Outgoings – in addition to any loan repayments, lenders will look at any financial commitments you have, such as childcare costs
Savings – this shows you have an ability to save and have built up enough money to pay for your deposit and other expenses
Credit record – this shows the repayments you have made on any loans you have. If you have missed repayments in the past, it may make it more difficult for you to get a mortgage
The value of your house – this is the market value or purchase price of your house
The amount you need to borrow – this is the difference between the amount you have saved to put towards the house (your deposit) and the purchase price of the house
Whether you are borrowing on your own or with someone else
Once your application is approved
Many lenders give ‘approval in principle’. This means that your lender approves you for a mortgage of a set amount, based on the details you provided in your application
Your mortgage loan approval will remain valid for a short period of time, usually three to six months. Your mortgage offer will have an expiry date – and you must draw down your mortgage before this date. Once a loan offer expires, you will need to apply again and if your circumstances have changed or your lender’s criteria has changed, you may not get approval again
The interest rate shown on your mortgage loan approval is not necessarily the rate you will pay. Usually, the interest rate for your mortgage will be set only on the day that the money is actually lent to you
Keep a copy of all correspondence and documentation from your lender in a safe place
Shop around for mortgage protection and home insurance. Your lender can insist that you have mortgage protection insurance in place, but you don’t have to buy it from them
When your mortgage is approved, your lender will ask you to fill in a direct debit form so your repayments can be collected from your bank account