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.
Some people prefer to know how much their monthly mortgage payments will be. If this applies to you, then a fixed-rate mortgage would be better suited for your circumstances.
A fixed-rate mortgage is when your monthly mortgage payments will be a set amount every month. You need to be aware that the longer you fix for, the higher the rate becomes. But this will not change the duration of your term, which can vary anywhere from 1-10 years.
If you are looking for a cheaper fixed-rate mortgage, make sure to avoid taking out a longer rate. Otherwise, you could face much higher interest rates if you take one out any longer than 2 years.
If you take out a mortgage for ten years at a certain percentage, interest rates might have risen during your term, leaving the lender out of pocket whilst you’re sitting comfortably on a lower percentage.
That presents a higher risk to the lender, so longer terms tend to come with higher rates. In sticking to a shorter-term fixed-rate mortgage, you will find yourself with a better rate, but only for that two years.
Those two years will eventually come sooner rather than later, implying that you will have to start searching again for more deals at the end of the mortgage.
If the interest rates have risen during the duration of those two years, then you could be faced with higher payments than you were used to at the start of renewal.
If you prefer to limit searching for new deals every two years, then maybe you would better suit a 5-year rate. By fixing it for five years, you would have a stable recurring payment for a much longer time.
As previously discussed, being on a fixed-rate mortgage for 5 years will mean that you will be paying more per month than you necessarily would on a two-year rate.
When people consider taking out a long-term, they usually range anywhere from 7-10 years. Long term fixed-rate mortgages were never a popular choice to choose, and they aren’t something we would recommend. But, like most mortgages, there are both pros and cons to taking out a long term fixed-rate mortgage.
Anything could happen within a decade, so committing to a fixed payment for as long as 7-10 years may create problems with lenders. If the rate suddenly drops below your current rate, instead of rising. You may end up paying well over what you otherwise would’ve been, and once you are in the deal, you cannot get out of it.
A Repayment Charge (ERC) is where something happens that affects your financial situation. This leaves you having to repay your mortgage earlier than you had initially expected and, your lender may present you with a charge.
How they calculate the charge is they calculate a percentage of the remaining that you owe. An example would be if you manage to pay off your £100,000 mortgage early and your ERC is 4%. You would be charged a £4,000 penalty as you have broken the fixed-rate contract.
Nobody can get away with not fullying paying off their fixed rate and will still be charged with an ERC. For example, if someone is aware that their fixed rate is due to end soon. But start looking up deals for their next fixed-rate mortgage.
If they find a great deal and think that the rate may increase, they may look to pay off the rest of their fixed-rate payments to switch to this new deal, even though this, of course, comes with additional charges.
We advise that you avoid chasing “headline” deals advertised. Chances are, your circumstances may have changed, and you’re not guaranteed to get it at the rate you were hoping to achieve.
If you are a first time buyer in Birmingham or moving house and would like more information or some help with a fixed-rate mortgage, our experienced team of mortgage advisors will be on hand to provide any assistance they can.
Remember that the lowest rates come with the highest setup fees, which some customers are keen to avoid. Get in touch today for more fixed-rate mortgage advice in Birmingham.
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.
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.
So, you’ve had your offer accepted on a property, however, is the house actually worth what you’ve said you’ll pay for it?
A property survey will be carried out to find out the true value and the overall condition of a property. They will also highlight any issues with the property, such as major/minor damages.
There are three main types of property surveys: Mortgage Valuations, Homebuyer’s Report and Full Structural Survey. Sometimes, a property survey can be carried out free of charge, it depends on the lender that you use.
Depending on the survey that you choose, the outcome of your survey report will vary. Some will provide more detail, whereas others will only touch upon certain aspects. You’ll find that the more in-depth a survey is, the more costly it will be.
If you discover something on your survey about your property that you weren’t told about, by law you are allowed to approach the seller and work out an alternative price if necessary.
Mortgage Valuations are the simplest type of property survey. These are carried out just to work out how much a property is actually worth. Your lender will need to ensure that the property price matches how much you are set to borrow from them. For example, if you put in an offer above the property’s actual value, the seller will likely accept your offer, however, your lender won’t. Unless you have the funds to make up the difference the lender will pull out of the deal. This is called a down valuation.
Unfortunately, this type of survey will not point out unobvious repairs and damages. However, it can inform you of clear structural defects that will require a further look at. For further property investigation, you will be required to pay more to upgrade your survey. In the long run, this may be worth it.
A Homebuyer’s Report focuses on safety. How safe is the property? Is it suitable for living in? These things need to be checked as there could be a mould problem, damp issues or something that does not pass the current building laws.
The report will be carried out by a property expert. They will examine the property from top to bottom, making sure that it’s safe for you to live in.
As a Mortgage Broker in Birmingham, if you’ve made an offer on an older building, we would strongly advise that you take up a Full Structural Survey.
This is the most expensive property survey because the whole property is surveyed. It will also provide the biggest insight to the property out of the three main surveys, highlighting what condition the property is in and what changes need to be made if the property purchase goes through.
A Full Structural Survey can take as long as a whole day depending on the size of the property.
New build properties work slightly differently. There is a property survey specialised for them called a Snagging Survey. This survey will point out both minor and major issues, it could be anywhere from a missing hinge on a door to cracks in the ceiling.
If the new build has already been built and it’s ready for you to move into, ideally, you want to get a snagging survey carried out on it prior to moving in. This way, you have the power to negotiate pricing if there is anything wrong with the property.
If you need help to choose the right property survey for you, feel free to get in touch with our mortgage team. We’ve helped thousands of First Time Buyers in Birmingham and Home Movers in Birmingham choose property surveys in the past – you could be next!
You can obtain the services of a surveyor to carry out a Homebuyers report or building survey through the Royal Institution of Chartered Surveyors.
During your mortgage application, you will have to be certain that all of your information is up-to-date and correct. One of the most important things that need to be right is your address and that it matches where you are currently living and not a previous address. You will need to check this across all of your account’s.
When applying for a mortgage, a lender will look at a variety of different things. They will look at your credit score, credit file and will require supporting evidence to back up your application. This will include documents such as payslips, bank statements, proof of ID and proof of address.
You may encounter some mortgage hurdles along the way; it could be something listed above, or it could be something completely different. One of the most common mortgage hurdles that we see is a low credit score. Your credit score can be impacted by a lot of things, in this case, if your addresses are keyed in wrong, your credit score could potentially be harmed.
For example, if you haven’t changed your address and you receive a fine that gets sent to your old address, you wouldn’t know about it and it could just build up. This could impact your credit score as the debt is in your name and not getting paid off.
As a Mortgage Broker in Birmingham, we have seen many home movers that had deliberately chosen not to change their address because they thought that it would impact their credit score negatively. Yes, if you have too many addresses on your account, your lender may ask you why, however, it’s unlikely that you’ll be declined just for having lots of addresses on your credit record.
First Time Buyers moving out often leave their address on their account linked to their parents/previous home. In this case, it’s not too detrimental as your parents can inform you of anything that is sent/billed there. In another situation where you are moving out of your first home into your second, and your details are linked to your previous address, things can start to get complicated.
Ideally, when you are Moving Home in Birmingham, you want to change all of your addresses to your new home. This will prevent anything from potentially affecting your credit score.
There is no harm in double-checking that your addresses are all up-to-date before applying for any sort of credit. Are all of your credit card accounts linked to your current address? Is your car and insurance address correct?
Another thing to check for before you apply is that the date that you moved in and out of your home is correct.
If you don’t get the dates right for when you moved in and out of your home, it can appear as if you were living at two places at once. Not only will this reflect badly on your credit file/score, but lenders will also question why your addresses are wrong.
This is why you should always double-check your addresses. You need to make sure that everything has been entered correctly so that it doesn’t look like you live in two different places at once.
If you need any help in changing out your addresses or checking whether they are correct or not, one of our Mortgage Advisors in Birmingham would love to help. During the mortgage application process, they will run through this with you to make sure that you’ve keyed in all of your information correctly.
Keeping on top of your information and ensuring that it is up to date will help with your mortgage application. This benefits the Lender as they don’t have to spend a lengthy amount of time assessing documents and questioning incorrect information that flags up. It also benefits you, as it speeds up your mortgage process.
For expert Mortgage Advice in Birmingham and help submitting your mortgage application with all of the correct information, make sure to get in touch with our great team. As a Mortgage Broker in Birmingham, in the past, we’ve helped thousands of applicants secure a mortgage.
We work 7 days a week, so if you need help with your mortgage application and checking your information, get in touch today for a free consultation. We can’t wait to try and help you!
A credit score is a series of numbers that lenders use to help decide whether you get accepted for a mortgage.
Using the information displayed, lenders will look at your credit report, application form, plus any additional information they hold on you (if you are an existing customer). All this data gets used to calculate your credit score representing your credit history mathematically.
It can help Lenders indicate what kind of borrower you are and how likely it is to manage your repayments. There’s no specific number when it comes to your score. Different Lenders will be looking for other things in potential customers, so you may be better off with another while you may be not ideal for one lender.
🏠 300-580 – If your credit score is at this standard, lenders will classify it as a poor score; having a score like this will lessen your chances of a lender accepting your mortgage application.
🏠 580-670 – Having a credit score like this is considered fair, and some lender may be more lenient with accepting your mortgage application.
🏠 670-740 – This is a much better score and helps increases your chances of having your mortgage application accepted. We tend to find that most customers tend to fit into this category.
🏠 740-800 – This is very good! A score as good as this will increase your chances of having your mortgage application accepted.
🏠 800+ – Having a score that’s 800+ is exceptional; you have increased your chances of having your mortgage application accepted above average; congrats!
Generally, the higher your score, the better your chances of being accepted for your circumstances ‘best’ deal.
Don’t think you are the first; often, countless customers come to us after being declined for having a ‘low’ credit score. As a Mortgage Broker in Birmingham, we have to deal with these sorts of cases daily. We come across that the applicants are the subject of a county court judgment (also known as a CCJ).
If you fail to repay a loan/borrowed money, you will likely get a CCJ. A CCJ can leave a severe dint on your credit file for 6+ years. The best course of action is to pay off your debt before applying for credit. The CCJ will undoubtedly pop up on your file, and the Lender will start asking questions. Sometimes the little things can cause damage too, for example:
🏠 Failing to stick to credit agreements.
🏠 Failing to keep up with your mobile phone contract payments.
🏠 Dipping into your overdraft every month.
🏠 Using multiple price comparison sites.
Here we’re just a few things that could negatively impact your credit rating; there are many other reasons you could have bad credit. In any situation, it’s our job to help you improve your score, so you get the chance to have your mortgage application pass the Lenders criteria! There are various ways to improve your score to try and get you up into that next bracket, and the good news is it may still be possible to secure a mortgage in some cases!
Trying to improve your credit score can be a time-consuming task, but with the help of this handy guide, you may be able to go up another bracket. We must warn you that each Lender has their individual lending criteria, so your score may impact what deals you can access. Just because you have an excellent score doesn’t mean that you will tick every Lenders boxes. It’s sometimes down to personal circumstances and up to your Lenders criteria.
Every time you go directly to a lender and their in-house mortgage advisor puts you through for a deal, they will perform a soft or hard credit search on you, and this search will leave an imprint on your credit file. If your application is declined for any reason, the credit search performed could harm your credit score.
Multiple searches may lower your chances of getting accepted for a mortgage in the future. With the help of a Responsive Mortgage Broker in Birmingham will come in handy we aim to get it right the first time. We will look at your credit score and only approach lenders that hold criteria we know you will pass.
Applying for credit can sometimes backfire on you, especially if you don’t have a reason for doing so. If you can pay back the credit that you’ve borrowed, it may look good on your application. However, flip the situation on its head, and your credit score could end up in trouble if you fail to meet the credit payment deadline.
During your mortgage application, we strongly advise that you hold off applying for credit. In some cases, you may be able to get away with it, but lenders may believe that you are struggling for money in other scenarios. They could think that you are putting it towards your deposit or using it to aid your mortgage payments.
Here’s a beneficial and easy way to improve your credit score; make sure that you are registered on the voter’s/electoral roll. Being registered on the roll shows that you are whom you say you are. All you need to do is go to the government’s electoral roll: it’s easy to register from there.
You must provide accurate information when registering on the voter’s/electoral roll, ensuring that everything gets filled out correctly. You will need to use your current living address, not your previous address.
We always recommend that you check that all of your accounts and details are linked with your current address during the mortgage application process. This won’t affect you as much if you are a First Time Buyer in Birmingham, and this is your first application.
However, if you are Moving Home in Birmingham from rented accommodation and you still have your parents address linked with any of your accounts, your Lender will pick up on it straight away. This is why it’s essential to change your addresses and make sure they’re up-to-date before applying. Being linked to the wrong address could impact your credit score.
If you go down the broker route, our Dedicated Mortgage Advisor in Birmingham will help you out with this step. Your designated advisor will make sure that everything is updated with you to ensure that you have the best chance possible of being accepted for a mortgage.
Maxing out your credit card(s) each month will heavily impact your credit score. Your Lender will like it if you can pay off your credit card balance each month as it shows that you can manage your money.
If a lender can see that you are exceeding credit card limits and constantly dipping into your overdraft, you may think you don’t take your finances seriously.
If you are still financially linked to an ex-partner or family member, your credit score could be getting harmed without you even knowing. If the account is still active and live, you won’t be able to remove your links. The only way to clear your connection is to get in touch with the credit reference agencies and make a request.
Depending on the Lender and how strict their lending criteria is, they may be lenient and allow some wiggle room. If there are some personal reasons involved, your Lender may be considerate and factor them into your application; it’s entirely up to them what they do.
A Mortgage Broker in Birmingham like us will always be transparent with you and factor in every bit of detail. Even if you have a score on the lower end of the spectrum, our incredible team of Mortgage Advisors in Birmingham is still determined to secure you a deal that will suit you. We have access to specialist mortgage deals through our vast panel of lenders; we are sure that we will find one that matches your mortgage needs.
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.