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Before you make any further steps on the property ladder, you will first need to think about the process of selling your existing property on the open market, if that is your plan.
Once you have gone through this process and have sold your home, you’ll be able to use the funds from that to put down a deposit on your new home purchase. You are also able to top this up with savings or a gifted deposit.
There is always that ‘magic number’, a minimum asking price that the seller is willing to go for, when someone makes an offer to them.
From the point of view of both the buyer and seller, a big part of negotiations will be how the property is marketed and showcased. Here are some recommendations on ways you can look to sell your home quickly.
When you decide on what your asking price will be, you need to make sure that it is reasonable, based on other properties like yours in that area. Speaking to an estate agent will give you a good idea of the highest value a property like yours could sell for, though this doesn’t mean it will sell for that.
As soon as your property listing goes live on the open market, your goal is to attract as many potential buyers as you can, likely as quick as you can. If not many people are interested, it may be that your asking price is too high for people.
Quick sales are needed if you’ve already found a property yourself, that you perhaps want to purchase and call home, but are waiting on your current property to sell before you can make an offer. This is why asking for a ‘fair’ price is a great way to start your journey of moving home in Birmingham.
As an open and honest mortgage broker in Birmingham, we have been working in the mortgage industry for over 20 years, we often find that the outside of a property is one of the most important parts of selling a property. It’s the viewers first impression, and first impressions do count.
It’s can be as simple as jet-washing a driveway or cutting your front lawn. It will show that you really care about your home and want people to see it in the best light from the get go. It may also get them excited to see the inside, if the outside looks that good!
You never get a second chance to make that first impression, so you should make sure the outside looks as spotless and clean as you can, to give them a good sign of things to come.
You will also want to be making sure that the inside matches the expectations made from the outside too. This means tidying up and making it so that the inside feels comfortable, warm and welcome to the viewer. You’ll want to remove any clutter from the hallway and from outside the front door.
When the viewer walks in, you want their perception to be that you have really looked after the place. Buying a new doormat, replacing any broken doorbells, all of the little things. This will all work in your favour and give a good vibe to the viewer.
Go around your house, room by room and pay extra attention to your kitchen and bathroom, as these are some of the most important parts of a house. Cupboards and wardrobes should have everything inside neatly stacked and free of clutter.
If you are a smoker, sometimes you can become accustomed to lingering smells, so it would be worth going around to open all the windows, just to make sure the house is nice and aired out before a potential buyer shows up.
Make sure that you keep every room nice and well-lit, make sure to open all curtains and blinds in darker rooms. Your home should feel nice and warm but not too hot. All light bulbs should be tested before viewings start, to make sure they all work properly.
You want potential buyers to feel as relaxed as they possibly can. Sometimes leaving out any family pictures or paintings you have as decorations in the house, can showcase the warmth of family, allowing them to see future potential.
You should also let them venture out and have a look by themselves, don’t be crowding them too much, as they will likely want the space, especially if they are a couple, to discuss it all amongst themselves.
Once again, it is important to ensure that the kitchen and bathroom are completely spotless. If you don’t use something daily, you should put it away, so that the rooms don’t look cluttered. Make sure towels are neatly stacked away, not on hooks or on the floor.
Double-check everything too, your whole house needs to be cleaned from top to bottom. Make sure clothes are not lying around and the bedrooms are dust-free.
Even cleaning the floors and windows. All repairs should be up to date too, with clean bedding on the beds, all these little things can make a huge impact in the long run.
Some people don’t realise that sometimes having empty space is a good thing! This is because it allows your potential buyer to personalise their possible future home. For example, an empty wall in a bedroom could allow them to visualise what they plan to do with it.
Make sure everything is tidied away and anything that isn’t needed, is thrown away. This can save you a job for when you move!
Having a garden can be the deciding factor for many property viewers. You need to make sure that there is no rubbish left outside, that it’s all clean and presentable.
Quite often, people will love to see colourful gardens, so even planting some new flowers could do the trick. Anything to liven up your garden could really help you out. Removing weeds and dead flowers, cutting the grass, removing grass clippings also help.
First impressions always count, remember to be welcoming, honest and most importantly, be yourself. A single view is just one set of potential buyers at the end of the day, you will no doubt have plenty more if an offer isn’t made first time.
Sometimes creating a balanced view on every problem that you have encountered with the house can help, for example, if you had a problem with a leak, say how you easily fixed it and that it’s very unlikely to happen in the future again.
Estate agents will want to earn their commission by talking to the property viewers as much as possible, however, you need to remember that no one knows as much about the house as you do, so don’t be afraid to jump in and tell them more.
Remember if you are selling to a first time buyer in Birmingham and have a family, it helps to mention how happy of a home it has been for you, as this is sure to rub off on the viewers if they are thinking of raising a family also.
Before we get onto what exactly a tracker mortgage is, first of all you may be wondering just how many different kinds of mortgages are out there for home buyers and homeowners alike.
There are a lot of different types of mortgages available to customers, with each of them being unique and demonstrating their own list of pros and cons.
Throughout our article here, we are going to take a focus on the tracker mortgage, what it is, how it can help and why it may be a better option for you to take when you are looking at all of your mortgage options in Birmingham.
If you have a tracker mortgage, this means that your interest rate will follow alongside the Bank of England’s base rate, with an additional percentage of interest being added on by the mortgage lender.
Your lender will not have the choice of how much they add on top of the base rate, as it is an external rate that they must follow.
For example, the Bank of England’s base rate might be somewhere around the region of 1%, with your lender being required to add on an additional 1%. So, depending on what the Bank of England base rate is, your mortgage will always be slightly higher than that.
Remember, a mortgage deal is only as good as the situation that it is put up against.
For example, you could get a tracker mortgage, only to figure out later on that you would be much better suited for working with fixed payments (utilising a fixed-rate mortgage), but you are already locked into a legal agreement with a mortgage lender.
It’s for reasons like this why we will always advise that you do plenty of research ahead of the mortgage process or look to obtain expert Mortgage Advice in Birmingham, to make sure that you are on the best deal for your circumstances. We do also feature an article on why use a Mortgage Broker in Birmingham, and list the benfits of having us on your side.
A Tracker Mortgage will work out well for you if the Bank of England’s rate is low. It will generally sit somewhere around 0-1%, though it will rise and fall as the year progresses. When the credit crunch happened, the market crashed and interest rates rose.
The highest point that it ever went up to was about 5%. Bearing in mind what we said earlier about your lender adding on an additional amount, you could’ve had 6% interest on your monthly mortgage payments!
If we head into more recent territory with March 2020, the mortgage market gave many in the industry deja vu. This time the panic surrounding interest-rates was brought in because of COVID-19.
This time though, things went a little differently, as the Bank of England’s rate dropped significantly, going down to a miniscule 0.1%. If you happened to be on a tracker mortgage during this time, it was likely that you went down to a 1.1% interest rate.
As you might expect during this time, it wasn’t possible to get a tracker mortgage. The reasoning for this, is that in reality, mortgage lenders are a business and need to make money too. This type of practice would’ve been poor business on their end.
As time has passed (as of December 2021), they have become readily available for customers, though they tend not to be as popular as they used to be.
Tracker mortgages rely heavily on the economy, so if the market is performing well, it’s a solid choice to go with. If the market is performing poorly, it’s probably not the best option for you to go with.
There are all-sorts of different types of mortgages out there for homeowners and home buyers in Birmingham, it’s all just about finding the right one for you and your circumstances.
Before you jump into something that might be harmful to you, it would be within your best interests to speak to an expert Mortgage Advisor in Birmingham about what your mortgage options might be.
They will be on hand to help you shop around for unique and suitable deals, ensuring that you have the best one you can possibly get for the situation that you are in.
Perhaps you are a First Time Buyer in Birmingham? Maybe you are looking to Remortgage in Birmingham or at your options for Moving Home in Birmingham? In any case, we believe that you will truly benefit from the mortgage advice of our experts here at Birminghammoneyman.
There is rarely a situation we haven’t come across. Utilising our knowledge and experience within the mortgage industry, we will be able to guide you onto the right path for what you are looking to achieve. Book your free mortgage appointment online and speak to a dedicated mortgage advisor in Birmingham today.
Buying a property can be the most expensive commitment of your life, therefore, it’s important that you know exactly what you’re paying for. All of the different costs can blend into one if you’re not careful, and you may be paying more for some parts of the process than you originally thought.
Let’s take a look at how much it costs to buy a home and the costs involved with property investment.
If you’re a First Time Buyer in Birmingham, you’ll find this article particularly useful as it will break down each cost for you and show what each one means.
On the contrary, if you’re Moving Home in Birmingham, it’s still useful to remind yourself of the costs involved so that you can prepare accordingly.
Once you’ve put down an an offer on the property in Birmingham and it’s been accepted, your lender will carry out a valuation on the property to make sure that your offer matches the true value of the property. Factors that could affect your valuation include structural damage, property age, the local market, etc.
Prices will vary for the valuation will vary from free of charge to several hundred pounds. Sometimes, you will be offered one for free as the price is incorporated into another cost or it could be a bonus for taking out a certain product.
They are also different types of valuations, and you will pay more depending on which one you need. For example, if you need a full building survey as you’re purchasing an older property, you may have to pay a lot more than someone who’s bought a new build.
Some lenders may charge you for taking out a mortgage with them. This type of fee usually comes with the products with the cheapest rates. It’s worth mentioning that not every mortgage will come with an arrangement fee, however, when they do, you may be expected to pay a large fee, such as £999, depending on the product and lender.
You may be asked to pay this fee upfront or have the option to add these to your mortgage balance. If you choose to add them to your mortgage, you may incur further interest charges. As a Specialist Mortgage Broker in Birmingham, we can compare 1000s of mortgage products on your behalf, trying to find a suitable one for your situation with minimal additional costs.
You’ll need a solicitor to arrange the legal side of the mortgage process. The fees quoted by various firms may differ enormously. An estimated amount for a low-value property would be £600. You will provide the solicitor with the new property’s address, whether it’s leasehold or freehold. You’ll also need to provide the purchase price to obtain quotations.
You need to make sure that:
You’ll only face estate agency fees when you are selling a home in Birmingham. Estate agency fees are rising alongside property prices; you can expect to pay between 1-2% of the property price. The minimum amount is usually £500 to sell your home. Prices may also rise when you look for a more personalised service.
Stamp duty is a tax that the solicitor will collect upon the competition of the property purchase, in addition to your solicitor’s fees and disbursements.
More stamp duty details can be found here: https://www.gov.uk/stamp-duty-land-tax.
A Mortgage Broker in Birmingham will usually charge a fee for their service. These fees will be disclosed upfront so that you know what you’re paying for and how much it’s going to cost.
We recommend trying to use a trusted company that charges upon completion only. Avoid any application fees where your money will be at risk.
The cost of moving all of your household items to another property can vary, it mainly depends on what service you want, how far you’re moving and how much stuff you have!
If you are happy to hire a van and transport your belongings to your new house by yourself, the service may cost significantly less. It can cost less than £500 in some situations. However, some people will prefer to pay for the full service and get someone to pick up their belongings and help them move. This service can be £1,000 plus.
If you want to speak to a Moving Home Mortgage Advisor in Birmingham, feel free to get in touch and book your free appointment online today.
The amount you need to put down to purchase a property in Birmingham comes down to two factors; what are you looking to achieve and your financial situation. Seeking the help and assistance of an open and honest Mortgage Broker in Birmingham can be beneficial as they can break down the amount you need for your situation.
100% and 125% mortgages are now firmly in the past. As we left behind the financial incident of the Credit Crunch, lenders seem more confident about offering customers the ability to take out a 95% mortgage. Prior to being eligible to take out your mortgage, you do need to show to the lender that you can manage your monthly payments responsibly and on time.
By doing this, you are showing the lender that you are a reliable applicant and are in a serious position to proceed. From a lender’s perspective, they don’t want to deal with a borrower who inhabits bad spending behaviours and falls into arrears which would result in the lender repossessing the home.
When speaking to customers, we do find that saving up for a deposit will be the most challenging of the process. This specifically applies to First Time Buyer in Birmingham and can be a big hurdle to them in the mortgage process. On top of this, there are a range of factors that could make it seem a lot more intimidating to someone without experience in this field.
Through our experience as a Mortgage Broker in Birmingham, we do find many inquiries about deposits. Below are some of the most common ones we receive.
In the years leading up to 2007 when the market crashed and we entered the Credit Crunch, 100% mortgages were readily available for first time buyers in Birmingham. There were cases where mortgage lenders offered up 125% loan-to-value mortgages. This worked when you buy your property that is valued at £125,000 and they would lend up you to £150,000.
To lower lending risk, they will require you to put down a deposit. If they lend you 100% of the purchase price and, unfortunately, fall into arrears, they would need to repossess the property. It would only take a slight fluctuation in that area’s house prices, which would be a loss on their end.
In the case where you haven’t invested some money, even if be from your income or a relative’s, into your home, and come across any hurdles in the midst of your term, it would be too simple for you to “walk away”. In the circumstance where you cannot save up a deposit of at least 5% of the property purchase price, you may not be in a position where you are financially ready for such a big commitment just yet.
For those who have a larger deposit to put down that is above the usual, then in many cases, you’ll find that your lender may offer you a lower interest rate. As mentioned, this all depends on the risk as they will lend you less, making you less of a risk. It is key to be aware that products are offered in different of 5% with 95% of Mortgage being the most expensive of the bunch.
This isn’t a very common option, however, there is a possibility to do this. Your mortgage lender wil put this down as a monthly payment which would mean that it is put down as an additional credit commitment for you. Because of the nature of this situation, there is a chance that you will be granted a smaller mortgage instead do the one you initially were qualified for you if you didn’t borrow the deposit from a credit provider.
We do find that mortgage lenders massively dislike this as even though part of the payment will be going to another party, you are technically borrowing 100% of the purchase price, adding interest on both the mortgage and the loan individually.
Many mortgage lenders will accept a gifted deposit and these can come from a range of people. Usually, this is from friends and family. There are particular rules that the ‘donor’ will need to follow including a confirmation form stating that the deposit is purely a gift and not a loan that requires to be paid back at some point in the future. Along with this, lenders will proof of ID and evidence of funds so you can keep in line
Also known as the ‘Bank of Mum & Dad’, we believe that gifted deposits have impacted the property market positively by providing an opportunity for many people looking for a helping hand on the property ladder.
As previously mentioned, you are required to provide specific forms of ID and documents to show where your funds came from because lenders like to see how your income has accumulated and how you have saved up.
In the case where it is shown in your account that you have had any large deposits moved into you bank account recently, the lender may ask you to provide documents to show exactly where it comes from.
For instance, if you have recently sold something expensive such as a car or an item that is of high value that you’ve been holding onto, you are required to provide the receipt and the amount you sold the asset for, this should match the amount shown in your bank account.
Massive cash deposits do set off alarm bells and pose as a problem, particularly when it comes to audit trials. Sadly. this can be one of the most difficult parts of the application. The general rule is the longer the funds have remained in your account, the more straightforward it will be for you and the lender.
In the case where you are selling your home or a property in your portfolio, then the Memorandum of Sale provided by the Estate Agent will be sufficient proof.
If you are in this situation, you may not necessarily need a deposit for a property. For example, if a house is worth £100,000, and you have been it at some form of discount like £90,000, then some lenders will count this as your deposit. This is beneficial if you have the Right to Buy Scheme from your local authority or other social landlords as there is a possibility you may be offered a discount here too.
For more information on this, check out our article on ‘Buying as a Sitting Tenant in Birmingham‘.
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.
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 are a first time buyer in Birmingham 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, there are many other different types of mortgages in Birmingham.
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 in Birmingham 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. Alternately we do feature an article on the benefits of using a Mortgage Broker in Birmingham, we can get your application on the right track and find you a suitable deal.
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 for First Time Buyers in Birmingham 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 deposit 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 are a First Time Buyer in Birmingham and know you have a good credit score 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.
First time buyers in Birmingham, and other consumers are 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.
Try it FREE for 30 days, then £14.99 a month – cancel online anytime.
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.
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 in Birmingham 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.
If you are a First Time Buyer in Birmingham looking 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!
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Birminghammoneyman.com & Birminghammoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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Birminghammoneyman.com & Birminghammoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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