One of the most important points at the start of your property journey, before you even get ready to make your purchase, is to ensure you have enough saved to cover the deposit. We regularly hear first time buyers in Birmingham that this part can sometimes be a little tricky.
Quite a common way around this, however, is for someone close to you to help you cover either a portion of the deposit or the full amount. This is called, quite aptly, a gifted deposit. In order for a gifted deposit to work, there will need to be an agreement that this is purely a gift and not a loan to be paid back.
For many, they benefit a lot more from buying a property and obtaining their own mortgage, than they do when renting from a landlord or local authority. There are lots of reasons for this, with one being that your monthly payments could be a lot less than you might have been paying per month on rent.
If you have worked out that you’ll be able to afford these monthly mortgage payments but can’t afford the initial deposit, then this is where a gifted deposit can become useful. In some cases we even see a gifted deposit being added onto an already saved deposit, increasing the amount.
The more deposit that is put down initially, the better rates you are going to open yourself up to. This in turn offers quite the benefit to home buyers, as you are guaranteed to lower your monthly mortgage payments in doing this.
We usually find that it is people’s parents, whether that be their birth parents, adopted or sometimes even carers, who are the ones that will gift a deposit. Across the industry, online and in person, you may see this with the tagline “The Bank of Mum & Dad”.
There are a few lenders out there who will possibly allow deposits to be gifted by some other family members such as aunties & uncles, though this will require your dedicated mortgage advisor to take more care when searching for the right mortgage lender to use.
If anyone over the age of 55 is willing to give you a hand, they may have the option of taking out an equity release in Birmingham as a means of gifting you a deposit.
When we have our primary chats with customers who are in the situation where they are struggling to save for a deposit, we will usually ask if they are able to be gifted the deposit from someone they know.
In those instances we either hear that they didn’t even know their parents could help, or they do know but don’t feel like they can approach them about the topic.
The reality is that if they are able to do so, most parents are more than happy to help their children if they can. Inheritance can help them achieve this, with some parents opting to gift it early if they have enough saved. We have also had cases where equity release has been used to help them out.
Lenders are not particularly keen on working with customers who take out loans for a deposit. The reason for this is because it is an additional financial commitment that could possibly get in the way of your mortgage repayments.
It’s not like there aren’t lenders out there who will accept this, because some of them will, it just makes for a more difficult process.
The majority of lenders out there won’t give you a mortgage unless you have at least a 5% deposit. Some may want more than this though and is entirely dependant on the lender and the situation. Bad credit, for example, will usually mean you have to put down at least a 15% deposit.
When it comes to gifted deposits, there is usually no limit to the amount that can be gifted. As mentioned earlier, the more you have, the better the rates you open yourself up to and the more likely you are to save money on your monthly payments.
Gifted deposits will mostly be beneficial to a first-time buyer in Birmingham or a home mover in Birmingham. It can also be a helpful tool to use alongside the Help to Buy Scheme in Birmingham.
Depending on the lender that your mortgage advisor in Birmingham selects for you to go with, the required 5% deposit can be paid via gifted deposit.
As a general rule of thumb, all mortgage lenders will require a gifted deposit form. You may be asked to provide additional proof and ID (such as a donor ID or bank statements).
This all depends on the lender that your mortgage advisor in Birmingham feels is right for you and your personal circumstances.
Your journey into the world of mortgages can be a rewarding endeavour. By the end of your process, you will likely end up with one of the following applying to you;
No matter which of these was your desired route, there will eventually come a time when your mortgage term is nearing its end. At this point you will have several options;
A remortgage is where you will use the proceeds borrowed from a new mortgage, in order to pay off a mortgage that you already have. There are a large amount of different options when taking out a remortgage, ranging from smaller options, to much larger options.
Generally speaking, the initial mortgage deal you’re on will last around 2-5 years, featuring lower fixed rates or possibly even rates at a discount. In some cases you’ll find yourself placed on a tracker mortgage which will follow on with the Bank of England’s base rate.
Most customers will fall onto their lenders Standard Variable Rate at the end of their term (you may see this mentioned across the web only as SVR).
To briefly explain this, an SVR is a mortgage that has an interest rate determined by what the lender wishes to charge and it can change. This also won’t follow the Bank of England’s base rate like a tracker mortgage would.
Because of the nature of them, these are usually the most expensive mortgage routes to take, leaving many to look at their options for remortgaging to get better rates, which will hopefully save you a good amount of money on your monthly mortgage repayments.
A few years into your living in your home, you may decide that something is missing. Maybe you need an extra room or larger living space for your kids or belongings, a new kitchen, a new office, or converted loft.
Rather than move to a larger house, many looking to release equity by taking out a remortgage at the end of their term, so that they can cover the costs of these plans.
Project planning and managing can seem a little daunting, especially when you have to factor in getting planning permission. That being said, others would maybe say that it’s a lot less stressful and more rewarding than the process of finding a new home, selling your current one and having to move everything you own.
Further down the line, this may prove to be even more of a beneficial plan, as creating more space and having good quality craftsmanship will likely increase how much your property is worth, which is useful for if you ever do decide to sell your home or rent it out.
Sometimes we find when speaking to customers that people may also wish to remortgage in Birmingham for a better mortgage term, by reducing the length of the term they are on or switching to a product that is a bit more flexible for their needs.
When you reduce how long your mortgage term is for, it means you won’t be paying back your mortgage for as long, though it also means that your monthly repayments will be a lot higher. The longer that you take out your term for, the lower your monthly mortgage payments will be.
Some customers may choose for a more flexible mortgage term. In doing so you may gain the ability to overpay your mortgage, which results in your mortgage being paid quicker. It can also give you the option to carry the same mortgage and rates over to another property, if you ever need to in the future.
Though a flexible mortgage sounds like the ideal mortgage type, they usually come in the form of a tracker mortgage, which as mentioned earlier will follow on from the Bank of England base rate. This will mean that one month your payments could fluctuate based on interest, making them a little inconsistent & unreliable.
Everyone that owns a home will have some level of equity in their property. This can be worked out by looking at the difference between what’s left to pay on the mortgage and the current value of the property.
As discussed briefly earlier, remortgaging can be used to fund any potential home improvements. Still, there are more options out there than just that. Some homeowners will use it to cover long-term care costs, boost their income, have a well-deserved holiday, pay off an interest-only mortgage, or free up some spending money.
Sometimes when speaking to customers, we’ll also find that some buy-to-let landlords in Birmingham will use equity release as a means of covering the necessary deposit to purchase an additional property for their existing property portfolio.
Whilst we’re mentioning the topic of equity release, we should probably mention another big one people use their equity for, that being to pay off any unsecured debts that may have built up over time.
Though it may seem easy to the untrained eye, debt consolidation bases not only takes into account the amount on how much owe on your debts, but also the value of the property and the state of your credit rating. Because of this, you may be limited in the amount you are allowed to borrow for a mortgage.
On top of this, to pay off your previous mortgage and your debts, you will need to borrow an amount that is higher than your outstanding mortgage amount. This will mean that your monthly repayments will probably be higher. Granted none of this is ideal, but you can worry less knowing that you have some options out there if things don’t go to plan.
If you find that you do have a particularly damaged credit rating, you still have options out there. You must bear in mind though that these will not be easy and require very specialist remortgage advice in Birmingham first.
Even with a specialist on hand, there is no guarantee you will definitely obtain a mortgage. You should always seek mortgage advice prior to consolidating and securing any debts against your home.
If you are a homeowner nearing the end of your mortgage term, wondering what your options may be for remortgaging, we definitely recommend that you get in touch with a knowledgeable and reputable mortgage broker in Birmingham today.
A dedicated and trusted mortgage advisor in Birmingham will help discuss your circumstances, creating a game plan for the next step of your mortgage journey. It’s always our aim to ensure the second time around is quicker and smoother than your previous mortgage experience.
Once you have gotten the hard part out of the way, that being saving up for your deposit (or if you’ve utilised a gifted deposit) and have decided you are ready to buy your first property as a first-time buyer in Birmingham.
The next step is to get yourself prepared for the mortgage process that is about to follow.
In our experience as a mortgage advisor in Birmingham, we have found that customers benefit the most by getting in touch with a mortgage broker as early on in your process as you can.
Your dedicated advisor will help you to work out an outline of the amount you could be looking to borrow for a mortgage and how much your monthly mortgage costs could be.
Before anything else, your top priority should be to obtain an up-to-date credit report. You ideally don’t want any credit issues such as a missed phone contract payment, to hold you back from a mortgage. A credit report will be able to show you potentially harmful factors.
Following these steps will give you a realistic overview of the likelihood that you’ll succeed with a mortgage and what your budget could be. This will help you to organise your accounts, such as any existing credit cards or phone contracts.
Our hard working and dedicated mortgage advisors in Birmingham are able to obtain a fully credit-checked agreement in principle for you, within 24 hours of your primary mortgage appointment.
There’s a lot of important paperwork for you to gather for your process, so it’s a good idea to start organising what you will be required to have ahead of looking for your mortgage. In doing this, you possibly enable yourself to go through the process quicker.
We need to be able to prove your identity. With this, you’ll need to provide us with some photo ID such as a driving license or passport, so that we can prove who you are.
On top of this, you’ll need to prove where you are living. To achieve this, you need to send us a utility bill or original bank statement that has been dated within the last 3 months of your current home address.
One of the most important factors when seeing if you qualify for a mortgage, is analysing your income and spending habits. This can can be a big difference maker in whether or not you obtain a mortgage. Your bank statements should show your income and what you having regularly going out.
Lenders will not be too thrilled to see gambling transactions on your account. They also won’t be too happy if you go over an agreed overdraft limit or if your direct debits regularly bounce.
It’s best to plan ahead regarding your bank statements. The more organised they appear to be, the more likely you are to be accepted by a mortgage lender.
You will have to prove you have the financial capability to pay for the deposit and also evidence where this came from for the purpose of anti-money laundering.
Try not to move money around your accounts too often as it will make auditing where everything came from a little complex. Lenders like to see you build up your savings, so you’ll need to provide individual proof for any large financial deposits into your bank account.
We regularly see that money for deposits has been given as a gift by a member of your family. The gifted funds also need to be evidenced, with the “donor” needing to sign a letter to confirm it is a gift and not to be paid back as a loan.
Regarding being able to afford a mortgage, the most important thing is to be able to prove your that you are financially capable to keep up monthly mortgage repayments.
If you are a regular employee, the proof you will be required to provide is the last 3 months’ payslips and most recent P60. Lenders can take into account frequent overtime, commission, shift allowance and any potential bonuses.
If instead you are an applicant who is self-employed in Birmingham, then you’ll need to enlist the help of your accountant. They will help you request your last 2 or 3 years’ tax overviews and tax calculations documents from HMRC, which you can use for proof of income.
When taking out a mortgage in Birmingham, it really is a good idea to prepare yourself ahead of the process starting. Make note of what you expect your outgoings to be after you move and work out what you are able to afford.
Factor in costs like council tax and utility bills, food, drink and leisure activities. This will demonstrate how much money you actually have free to put towards monthly mortgage repayments.
It may seem like a difficult process, but without taking the steps we mentioned above, it is not possible to proceed with any lender or broker. Once you have taken the necessary steps, you’ll be just that little bit closer to your home owning dreams.
It’s better to prepare yourself in advance, making a collection of everything a mortgage lender might wish to see. This saves both your time and frustration further along the process, especially if it’s something that could’ve easily been arranged at the start.
A mortgage agreement in principle is basically an obtainable document or certificate of confirmation that proves to the estate agent or seller of the property that ‘in principle’, the bank is willing to lend you a certain amount for a mortgage. You may also see this called a decision in principle.
This is something that we will always look to obtain for of our customers if they don’t have one already, and something we can usually get within 24 hours of your initial appointment.
In order to obtain an agreement in principle, you will have to pass the lenders credit score. This works out well because in almost all cases, this is a very good sign to the lender that you are creditworthy and could be trusted with a mortgage.
If you are in the market for buying a new home as a first time buyer in Birmingham, then an estate agent will often want to check again and again in order to make 100% sure that you are ‘mortgage ready’ when it comes to making any offers on a property.
In having this certificate on hand, you will prove to the seller that you are able to obtain a mortgage for the amount you will need to purchase the property and are ready to proceed with the sale.
A mortgage agreement in principle will not be a definitive guarantee of being able to obtain a mortgage, as the rest of your full application will require further background checks (such as evidencing your income) and having a property valuation undertaken on the property you’re looking to buy.
As an experienced mortgage broker in Birmingham, we highly suggest that all customers try to obtain an agreement in principle at the earliest opportunity. This is because of the following reasons:
1. Negotiating Power.
2. Avoid Disappointment.
3. Knowing Your Limits.
Once you reach the point of being able to make an offer on a new home, the majority of estate agents will undertake the necessary steps to ensure that you can go forward with a mortgage on the property.
Generally speaking, they will require you to provide them with evidence that you are able to afford the purchase of the property, prior to listing the property as sold and taking it off the market.
If you have already managed to have a mortgage agreed prior to making an offer on the property, you’ll come off as more appealing to the seller.
This will also prove to the seller that you’ve put a lot of careful thought about your mortgage journey and not just decided to purchase out of the blue, with no preparation.
This might persuade a seller to accept any offers that you make that are lower than the initial asking price. Make sure not to make offers too low though, as you don’t want to insult the seller.
When it comes to making a purchase on a property, we often find that customers can go full steam into the process, making an offer on a property without making sure that they can afford to actually buy the property in the first place.
This could lead to customers facing potential disappointment if the mortgage application happens to fail, as by that point they may have already had their heart set on that property.
By getting in touch with a mortgage advisor in Birmingham early on, the potential disappointment that you otherwise would’ve faced could potentially be avoided.
Often, there are various factors that are causing a mortgage to decline that can be overcome with a little time and the guidance of a trusted mortgage broker.
If you know you have a good credit rating because you’ve never been turned down for credit, have paid everything on time and are registered on the voters roll etc, it is still worth getting in touch with us for mortgage advice in Birmingham.
You might find that you could approach various different lenders and each time get a different max mortgage amount back from them. These lenders all calculate affordability in their own unique way, with their own individual criteria.
If you are self employed in Birmingham, though the mortgage process is not completely impossible to navigate, it can be very complex for self employed applicants, without the assistance of a mortgage broker in Birmingham by your side.
Some lenders will take your net profit, others are known to use your salary and dividends. Some use your latest year, whereas some others will use an average over three years.
Being aware of your borrowing limits is very important when it comes to applying for a mortgage, as then you have a realistic idea of what your price range on a property is going to be.
Our team of mortgage advisors in Birmingham will be able to give you a guide of the potential maximum mortgage available to you and help you to work out an estimate of the amount you’ll possibly be paying back per month for your mortgage.
As we saw over the course of the coronavirus pandemic, the idea of working from home is now becoming increasingly popular. There are those who maybe would’ve never thought to work from home, now very fond of doing so once their hands were tied and they had to. Many are now fully converting their kitchen, living room, or even a bedroom into a home office.
A lot of these were already working from home, and some businesses now actually prefer for their employees to work from the comfort of their home, rather than going backwards and forwards to the office. This in turn would be saving you a lot on travel expenses, saving you money.
Interest rates for the time being are low, and these are the lowest interest rates we’ve seen for mortgages in a long time (at the time of writing this post; 06/07/2021), making it a good time for people to borrow money. Remortgaging in Birmingham for home improvements to make a home office can make quite a large huge difference, such as:
Especially now that we live in an age of great technological advancements, lots of homeowners consider getting a Remortgage in Birmingham for additional funding to put towards home improvements to convert a room or perhaps a garage to a new home office.
Assuming an interest rate of 2% is possible over 25 years it might cost you:
That’s probably not too much more than what you are currently paying and it can make sense for a lot of people to choose the route of improving their home, as opposed to moving, especially when you consider the stress and cost involved in buying a new home.
Many factors will impact how much you will have to pay back per month and how much you can borrow overall. It is down to exactly what you’re looking to do and how you’re looking to do it, such as the size of the extension.
You will also need to consider that if you’re looking to remortgage, you will have to go through another affordability assessment, even if you go through the same lender and just switch deals.
If you’re looking to remortgage for any home improvements, there is no better time to look for a remortgage deal than the present.
As a dedicated remortgage advisor in Birmingham, we are able to search through thousands of remortgage deals on your behalf, looking to find the perfect one for you and your situation.
Having a hard working team of friendly mortgage advisors in Birmingham by your side could help simplify the mortgage process, saving your time and money throughout.
We offer all our new or existing customers a free mortgage consultation. Get in touch with us today to book your free remortgage consultation in Birmingham & we’ll see how we are able to help.
Consumer awareness of credit scoring appears to be higher than ever before, and a large majority of people who get in touch with our team appear to have already reviewed their credit reports online.
There are lots of different credit reference agencies to choose from, with the two most commonly heard of companies being either Experian or Equifax. We personally would recommend that new clients use Check My File for a 30-day free trial. If you do not cancel, this will change to £14.99 a month, though you can cancel this at any point in time. This report offers our clients a collaborative look at the information produced in an easy to understand the color-coded credit report.
Often our customers will ask if our Mortgage Advisors in Birmingham will be doing a credit search of their own, because they are aware that too many searches can cause problems for their credit score. The lender always runs credit checks, but our Mortgage Advisors in Birmingham will ask the client for their permission beforehand.
A hard credit search will provide a much more in-depth look at your credit report. Any financial institution that looks to carry one of these out should seek your permission before doing so. The advantage of a “hard” search would be that you have a much higher chance of succeeding with your mortgage if you pass the credit search, as they will have already gone quite deep into your details.
The only thing that can go wrong from then on is if, for some reason, you cannot provide satisfactory documentation to back up the information you have disclosed, or it turns out you have provided false details.
Another benefit to the hard search is that it leaves a ‘footprint’ on your credit file, meaning that anyone who looks at your report can see that it you’ve already been under the microscope so to speak. This isn’t inherently a bad thing but if for example, you have multiple searches included in your credit file in a short period, then it could be perceived as you are applying for lots of credit at once, which the lender may feel is suspicious activity.
The footprint does not state whether your application was successful or not but if you have several searches over a few weeks then lenders’ systems could wrongly assume you are being declined on the basis that “Why else would you go to Lender number two unless Lender number one had said no?”.
The odd hard footprint on your record is no big deal so this doesn’t give reason to worry a whole lot about it. The main lesson to take away here, is take precaution in having too many hard searches, as this could negatively affect your process.
On the other side of the coin, we have a soft credit search. This is a much ‘lighter’ search which looks at your financial situation and would be the type of search that would be carried out on price comparison websites to let you know what may be available to you. It may also be used from time to time, in order to verify your identity. Many mortgage lenders carry out soft searches, and we’re always seeing more lenders switching to this type of search.
While less information is offered to who is carrying out a soft search, as opposed to what they would receive if it were a hard search, you can still get a good idea as to whether or not you’ll find mortgage success by obtaining an Agreement in Principle. If you get this, you’re theoretically in with a good shot anyway.
One of the most beneficial things about soft searches is that while you will be able to see soft searches that have been carried out on you, if you check your credit file (people are usually surprised by how many have been carried out on them) these searches are not visible to other financial institutions like banks, building societies or other mortgage lenders. This means you can freely apply for an Agreement in Principle and it is unlikely to damage your credit score, whether it is successful or not.
If you are in the market for making an offer on a property as a First-Time Buyer in Birmingham or are maybe Moving Home in Birmingham, our trusted Mortgage Advisors in Birmingham would highly recommend that you have a Mortgage Agreement in Principle in place before getting in touch with the seller.
You want to be able to give yourself the best possible chance of securing the property you want at the lowest possible price, so if you can demonstrate that you have your finances in a good place, you are effectively giving yourself the upper hand. Having an Agreement in Principle could also mean that any estate agent may be put off trying to ‘cross-sell’ their other in-house mortgage services to you.
If you have been reading up on mortgages or more specifically have been having a look at what your options may be for taking out a Remortgage in Birmingham, you may well have seen the term Capital Raising before.
When seeing this term, you may be confused and wonder what exactly is Capital Raising? Capital Raising is simply the act of raising money for a purpose, with money in this case referred to as the Capital. There are a few different ways this can be achieved and it is used for a variety of different reasons.
Generally we find that it is quite common for customers to take out a Remortgage as a means of releasing the equity that is in their property. If you are unsure of what Equity is; Equity is the difference between what you have left to pay on your mortgage and how much the property has been valued at.
If the value of your property happens increases in value over the duration of your mortgage, rather than Remortgaging to Release Equity, you may have the option to take out a Further Advance. This mortgage type allows you to take out an additional mortgage on your property to borrow an additional amount, as a means of releasing the equity in your property.
This mortgage will generally be taken out over a longer term and have interest rates at a lower rate than a standard personal loan would be, although this is something you will pay back alongside your existing mortgage.
This can be a really solid option for homeowners who are not looking to Remortgage, or maybe tied into their existing deal. It’s important to remember though that there are risks, such as a higher risk of repossession if you cannot keep up the much larger number of monthly repayments.
A Second Charge Mortgage works in a similar way to a Further Advance, as with this mortgage type you will be taking out an additional mortgage alongside the one you already have, as a means of releasing the equity in your home for future home improvements or anything else you wish to spend your newly acquired income boost on.
The difference between a Second Charge and a Further Advance is that with a Second Charge you will often be with another lender and on a slightly different interest rate. In the unfortunate event of a repossession, your initial mortgage lender will be paid back from the sale of the property in question, with any remaining funds used to pay off the Second Charge with the second lender.
There are lots of reasons why you may find yourself needing to Capital Raise and release equity via a Remortgage. The options for this that we often hear include to fund any Home Improvements, Modifications or Alterations, such as a new home office, a possible home extension or even a conversion to a loft or garage. Sometimes, we also see customers using these to consolidate any debts that you have gathered over time.
Other circumstances wherein a homeowner may use this include; to gift a deposit to your kids, to purchase a second home (usually an option with Buy to Let Landlords in Birmingham), and to pay for larger purchases such as a car, wedding or holiday.
If you have any equity in your property and are in the market for a capital raising mortgage, then a Remortgage in Birmingham could be beneficial to you. As a general rule, mortgage lenders will let you borrow up to 90% of the value of your property.
Please do Get in Touch and we will advise you of the most appropriate course of action to take for your circumstances. If remortgaging isn’t quite the option for you, taking out unsecured credit might be a more suitable option. A standard Remortgage can take an estimate of around 4 to 6 weeks to fully go through.
With Debt Consolidation there are some risks to bear in mind. That is why we always recommend you speak with a qualified Mortgage Advisor in Birmingham, before you look at consolidating any unsecured debts against your property.
Birminghammoneyman is an experienced Mortgage Broker in Birmingham, here to help you find the best capital raising mortgage deal for your financial, as well as personal circumstances. All of our customers will benefit from a free Remortgage consultation with a qualified advisor. During this consultation your dedicated mortgage advisor in Birmingham will make a full recommendation.
If you happen to be over the age of 55, you may find yourself better suited for the option of Equity Release in Birmingham.
Nowadays, we find that self-employment is more common than ever across the country, with that also being the case in Birmingham.
As a Mortgage Broker in Birmingham, we are rarely seeing people remaining with their first employer from the first few years, all the way throughout retirement. Over time, they want to change their career paths in order to improve their personal development and financial circumstances.
In recent years, there are a lot more different opportunities for self-employed and freelancers within the digital sector. The world is getting increasingly more technological advanced, and we as people are becoming more and more interconnected. We are always learning, and are continually taking advantage of the opportunities that appear for the self-employed within these industries.
In years prior, it used to be quite a challenge trying to get a mortgage while being Self-Employed. Now we find that it is a lot easier to get a mortgage as a Self-Employed applicant, with more gaps are opening in the market and lenders becoming more relaxed and lenient with these applicants.
You need to make sure you are ahead of the mortgage game. In order to help you reach that point, we have put together some helpful mortgage tips for those who are Self-Employed and thinking of Moving Home in the Birmingham area, or perhaps are a First-Time Buyer in Birmingham.
If you end up going with a self-employed specialist lender, you will find that they often require you to provide one years accounts. High street lenders have a tendency to be a lot more stricter and will want to see two year’s accounts.
Unfortunately, statistics will show that most new business attempts will end up being unsuccessful, and this is why lenders always need you to evidence your track record, before they’ll allow you to borrow such a large amount of money.
Most lenders will have a look at the average of your last two years’ worth of income. That being said, if your business has grown over the past year and the lenders can see that you will be able to afford a mortgage and run your company simultaneously, they will go off the latest year and may ignore anything that has happened previously.
If you are a director of your own limited company, you are technically an employee of your own business. Lenders won’t see your situation that way and will only assess you as an employee if you own less than 25% of the companies shares.
Lenders often add the dividend you have drawn to your annual salary as a way to work out what your yearly earnings will be. The amount that you are able to borrow for your mortgage will be based on a multiple of these earnings.
You will find that sometimes there will be lenders that will work from your net profit, rather than your salary/dividend. The way this works is favourable for directors who like keeping their drawings low.
As an experienced Mortgage Broker in Birmingham, this is something we get asked quite often. During your annual meeting with your accountant, you will be able to talk about how to minimize your tax liability.
It works the other way when it comes to taking out a self-employed mortgage, the more income you have declared, the bigger the mortgage you may be able to obtain.
You will need a minimum of a 5% deposit for a self-employed mortgage. It’s works the same way as it does with regular employees. If you only have one years’ accounts, you might have to put down a little bit more for your deposit, in order to increase your chances of finding success.
For contractors, there are various different mortgage options that are available to them. It’s more common now to find people working from shorter term contracts.
If you are able to evidence that you have a good track record, your lender can consider taking your ‘daily rate’ over your net profit. This will be a benefit to contractors, as lenders will consider treating you as self-employed instead if that works out better for your situation.
You will need to know long is left on your current contract, as lenders will be asking you this. They must be sure that your income will be continuous, so they know whether or not that you will be able to afford your mortgage. It may even possible to get a mortgage when you are on your first contract, though this all depends on your specific circumstances.
You can no longer get a self-cert mortgage. They were mistreated and there are no plans for these to make a return.
We know that trying to get a mortgage as a sole trader, partner or company director can be challenging. It can be much easier for an employed applicant, as depending on the lender that you go to, some are stricter with their criteria than others. This is why if you Get in Touch with a Mortgage Broker in Birmingham, you could reap the benefits.
Our mortgage advisors will give you a realistic expectation from the start, guiding you through the self-employed mortgage process and searching through thousands of mortgage deals on your behalf.
Every customer will receive a free initial Mortgage Consultation, so make sure that you get in touch with one of our Self-Employed Mortgage Advisors in Birmingham today.
Your personal circumstances will determine how much deposit you need to purchase a property. It also depends on what you are trying to do. Here your friendly Mortgage Broker in Birmingham will explain how much you might need given your situation.
The times of 100% and 125% mortgages are now firmly in the past. Now having the Credit Crunch also in our rear view mirror, lenders are feeling more confident about offering customers the ability to take out a 95% mortgage.
It is necessary that you prove to the lender, prior to taking out your mortgage, that you can in fact keep up your monthly repayments responsibly and on time. This gives the lender the comfort of knowing they can place trust in you, and that you are not a risk to them in the future. The last thing a lender needs is for a borrower to be irresponsible with their income and fall into arrears, which in turn would mean the lender has to repossess the home.
Saving for a deposit is often viewed to be the most difficult part of the process for many First-Time Buyers in Birmingham and one of the biggest hurdles in the property market. Along with this, there are various different factors which could make it seem even more intimidating to someone without experience in this field.
There are often many questions about deposits, so here at our Mortgage Broker in Birmingham, we try and answer as many as we can for our customers in need.
Pre-2007 before the market crashed and we entered the Credit Crunch, 100% mortgages were readily available for First-Time Buyers in Birmingham. In some cases, mortgage lenders were even offering a 125% loan-to-value mortgages. What this means is, if you were buying a property valued at £100,000, they would lend you up to £125,000.
To significantly reduce their lending risk, the mortgage lender is going to need you to put down a deposit. If they lend you 100% of the purchase price and you unfortunately happen to fall into arrears, they would need to repossess the property. From there it would only take a small fluctuation in that areas house prices, and it would be a loss on their end.
Also, there is a notion in the minds of some, that if you haven’t invested some money, whether it be from your own income or a relative’s, into your home, then you might find it a bit too easy to “walk away” if you suddenly encountered any hurdles during your term. It could also be argued that if you are not in a position to save up a deposit of at least 5% of the properties purchase price, then you may not be financially ready for such a large and important commitment just yet.
If you happen to put down a larger deposit than the usual standard, then more often than not you’ll find that your lender may offer you a lower interest rate. This all comes down to risk once again, because they will lending you less, thus making you less of a risk. It is important to know that products are offered in different bands of 5%, with 95% of Mortgages being the most costly of the lot.
In some cases you might find that this is indeed a possibility, though it is not very common. Your mortgage lender will consider it as a monthly payment and therefore put it down as an additional credit commitment on your part. As this is the case, you will likely be granted a smaller mortgage, rather than the one you originally would have qualified for if you had not borrowed the deposit from a credit provider.
This is widely disliked by mortgage lenders, because although part of the payment will be going to another party, you are essentially borrowing 100% of the purchase price, plus interest on both the mortgage and the loan individually.
The majority of mortgage lenders will accept a gifted deposit, and these can come from a variety of people. Generally speaking, this is from friends and family. There are certain rules that the ‘donor’ will have to adhere to such as confirming that it is purely a gift, and not a loan that is needed to be paid back at any point in time. They must also provide ID and proof of funds to help the lenders out with anti-money laundering regulations.
We can safely say, that if it weren’t for the ‘Bank of Mum and Dad’, the property market would look completely different.
As mentioned earlier on, various specific forms of ID and documents are needed to evidence where your funds came from, as lenders like to see how your income has been built up and how you have saved up.
If it is showing in your account that you have had any large deposits moved into your bank account recently, then you will need to provide the lender with documents to evidence exactly where it came from. For example, if you have recently sold something expensive like a car or something highly valued that you’ve been holding onto, then you will need to provide the receipt and how much you sold the asset for, which should be able to match the amount shown in your bank account.
Large cash deposits usually present themselves as being quite a large problem, especially when it comes to audit trails. Unfortunately this can sometimes one of the trickiest parts of the application. The longer the funds have been in your account then, the easier life will be for both you and the lender.
If you are selling your home or a property that is in your portfolio, then the Memorandum of Sale provided by the Estate Agent will be sufficient proof.
If you qualify for the Government’s Help-to-Buy Scheme, then the minimum deposit required will still be 5%. You are able to top this up to 25% via the equity loan, which will allow you to obtain a lower rate mortgage. An important factor to bear in mind is that if this if you consider this option, then the 20% deposit provided by the Government is to be seen as a loan. Whereas a Gifted Deposit is a gift, the Government Loan will need to be paid back.
You may not always necessarily need a deposit for a property. If the house is worth £100,000, and you have been offered it at some form of discount, for example, £90,000, then some Lenders will accept this as your deposit. This works well if you have the Right-to-Buy in Birmingham from your Local Authority or other social landlords, as you may be offered a discount here too.
Many would say that unsecured credit happens all too often and it’s not an uncommon occurrence for clients to approach us for Specialist Mortgage Advice in Birmingham when they have a missed payments or have a lower credit score than is acceptable.
Once you have missed one of your monthly mortgage repayments, or something considered rather small, such as a missed payment to a mobile phone provider, you may end up with a default attached to your credit report. This has quite a bad effect on your future ability to obtain a mortgage, as it will be a strong indication that you represent a higher risk to the lender.
That being said, having missed monthly payments or any amount of defaults will not necessarily mean you can’t get a mortgage, but you may be in need of specialist help. The reason for this, is that it is fairly likely you will be turned down for a mortgage by a High Street Bank who may be risk-averse, especially if you only have a smaller deposit the property you’re looking to move to.
Specialist Lenders will want to know the date the default was registered against you and the further away you are from that specific date, the more likely it is that we’ll be able to provide some form of help. This is particularly the case if it was down to a lifetime event such as separation, ill health or an untimely redundancy. People do make mistakes when they are young and it can feel that these financial mistakes come back to cause trouble down the line.
We may also be able to provide assistance if you have had historic mortgage arrears or a County Court Judgement.
Below we have compiled some helpful answers to frequently asked questions regarding Bad Credit mortgages in Birmingham & nearby locations.
No matter the type of credit problem you have had in the past we are going to need to see an up-to-date copy of your credit report, something which can usually be obtained online completely free of charge.
It’s important that you obtain your credit report before you decide to apply for a mortgage, especially if you have been having any doubts about your credit history. The reasoning for this, is that undertaking multiple unnecessary credit searches can further damage your credit rating.
The answer to this depends entirely on your personal circumstances. Some customers may be a little perplexed when it comes to the impact of their credit. It may look bad, they may have had something flag up and cause problems, but they have a sufficient income & enough deposit to reduce a rate and get a favourable mortgage. So why won’t the lender allow them to borrow a specific amount for a property, or anything at all for that matter? What it all ultimately boils down to, is risk.
The lender needs to have the utmost confidence that you are able to pay back your mortgage payments without a likelihood of any form of arrears occuring. If arrears end up unfortunately happening, the lender may need to repossess your home, which is something they definitely would prefer to avoid. Though it might sound rather difficult, there are still plenty of routes to take for people looking to get a mortgage with bad credit, even if those routes may incur slightly higher rates. Getting in touch with a dedicated Specialist mortgage advisor in Birmingham will be a the most appropriate next step to you finding your way towards a potential mortgage.
Sometimes, for reasons you may not exactly have control over, you may find yourself in financially struggling and unable to keep up the mortgage payments you previously had no trouble paying. These circumstances are really not an ideal place to find yourself in. Whilst it could be a momentary lapse for a month, one that you are able to pay back in no time, the damage is done and your record will show it as a missed payment.
There may be other credit issues too that you’ve been subject to during this time period, and when it comes to getting a Remortgage at the end of your term, or a new mortgage after Moving Home in Birmingham, you may find yourself in a spot of bother. As mentioned earlier on in this article, this will always end up coming back to the risk. Can the lender trust you to not find yourself in this situation again?
Luckily, as loyal providers of Specialist Mortgage Advice in Birmingham, we have had lots of experience in helping customers who have find themselves with bad credit, especially when they’ve previously had or currently have a mortgage. If this sounds like your situation, then speaking with a trusted mortgage broker in Birmingham will be crucial to finding success in your home owning future.
Customers may find themselves with all kinds of different adverse problems when it comes to their credit, all of which can have a negative effect the mortgage process. These issues vary from, but are not limited to;
Whilst these are all unfortunate and oftentimes disheartening situations to find yourself in, it’s not the end of the road. The process may take longer, there may be more hurdles on your path and you may end up on a higher rate, but there are specialist lenders out there, some of which we have on panel, who will accept you depending on what your circumstances are.
To increase your chances of success and open yourself up to better rates, we highly recommend that you take a look at improving your credit score. We have a helpful, in-depth mortgage guide that we’ve written on How to Improve Your Credit Score, which will hopefully put you in a better place for obtaining a mortgage at some point down the line.
If you are in need of some expert mortgage advice in Birmingham regarding a Bad or Adverse Credit situation, then Get in Touch with our affable and reliable team of experienced mortgage advisors here at Birminghammoneyman. We’ll use the knowledge we’ve gathered over our twenty plus years of service to our advantage, working incredibly hard to try and ensure we have a clear and concise plan of action for your credit score and hopefully, if all goes right, a favourable mortgage outcome for you at the end.