So, the difficult part of saving up for your deposit is over (or you’ve received support from the “Bank of Mum and Dad”) and have decided to purchase a your first property as a First-Time Buyer in Birmingham. The next step is to get yourself prepared for the impending mortgage process.
In our experience, we have found it’s incredibly beneficial to get in touch with a Mortgage Broker in Birmingham as early on in the process as you can. Your advisor will help build an outline of how much you could borrow for a mortgage and how much your costs could be.
Your top priority should be getting yourself an up to date credit report. The last thing you need is any issues with your mobile phone provider holding you back from buying a home. A credit report will be able to detail whether or not this is a factor, along with other circumstances.
Following these steps will give you a realistic expectation of how likely you are to succeed and what your budget may be. This will further help to organize your accounts such as existing credit cards and mobile phone contracts.
Your dedicated mortgage advisor in Birmingham will be able to obtain a fully credit-checked Agreement in Principle on your behalf, but you’ll have to provide proof of identity, address and income.
There’s a lot of important paperwork for you to get together, so it’s a good idea to open a file for yourself and start organising what you need ahead of looking for a mortgage. By doing this, you’ll hopefully also get through the process quicker.
We need to make sure you are the person you claim to be. As such, you’ll need to produce some photo ID such as a Driving license or passport in order to confirm your identity.
Additionally, you’ll need to prove where you live. You’ll need to send us a utility bill or original bank statement that has been dated within the last 3 months of your current address.
One of the most important factors when determining mortgage qualification, is the analysis of your spending habits. This can make or break your chances at obtaining a mortgage. Your bank statements should show your income and regular expenditures.
Lenders will be less than pleased if they see gambling transactions on your account. They will also be unhappy if you go over an agreed overdraft limit or if your direct debits regularly bounce.
It’s best to think ahead of time in regard to your bank statements. The more organised they appear to be, the more likely you are to get accepted.
You will have to prove you are financially capable of paying for the deposit and also evidence this for the purpose of anti-money laundering. Try not to move money around your various accounts too much as it will make audit trailing difficult. Lenders like to see your savings building up so you’ll need to provide individual proof for any large deposits of money into your account.
Often we see that money for deposits has been gifted by a member of the fam. These funds also need to be evidenced, with the “donor” needing to sign a letter to confirm it’s purely a gift and not a loan to be paid back.
Regarding affordability, the most important thing is to be able to prove your that you are financially stable and would be able to keep up regular mortgage repayments. If you are a standard employee, the required proof is the last 3 months’ payslips and most recent P60. Lenders can take into account frequent overtime, commission, shift allowance and potential bonuses.
If instead you are Self-Employed in Birmingham, then you’ll need the help of your accountant. They will help you request your last 2 or 3 years’ tax overviews and calculations (SA302) documents from HMRC, which will be used as proof of income.
When looking to take out a mortgage, it really is a good idea to get prepared ahead of schedule. Make note of your expected outgoings post-move and work out what you can 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 a mortgage.
It may seem like a lot of hard work, but it unfortunately is not possible to proceed without these things. Once it is done, you are one step closer to obtaining a mortgage for the property you have your heart set on.
It’s better to get all this in advance, making a collection of everything a lender could possibly want 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.