In response to the Government declaring Help to Buy a success Which? Mortgage Advisers has urged first-time buyers to be aware of the full range of options available to them.
Which? are keen to stress to first-time buyers that lenders not involved in the scheme are also offering competitive mortgages and that there are alternatives such as guarantor mortgages.
They hailed the headlines “confusing” and said they want to help first-time buyers be as prepared as possible when they are applying for a mortgage.
They have compiled a set of five tips for potential first time buyers:
– Be realistic – First-time buyers need to think carefully about the feasibility of buying and the total cost of moving — not just the deposit, but the associated costs such as legal and mortgage fees, moving costs and Stamp Duty.
– Check your credit history– It is important for first-time buyers to access their personal credit files and address any anomalies contained within. If there are any late or missed payments, an accompanying explanatory note can help lessen the impact it might have. It pays to be mindful of the need to establish a credit history.
– Pre-empt potential problems – It is important not to assume that lenders or advisers will be able to establish the most suitable mortgage for you unless you provide them with as much information as possible. This is especially important in situations where there may be anything slightly out of the ordinary. It is better to discuss your exact circumstances with an adviser up front rather than waiting to be prompted by a lender to provide this information.
– Presentation is everything – It pays to have all your documentation in order. When you apply for a mortgage you will need to prove:
– You are who you say you are (ID such as passport/driving licence) – You live where you say you do (utility bills)
– You earn what you say you do (latest payslips and P60s)
– Your banking conduct (latest statements and try to avoid being in your overdraft as lenders won’t look favourably on this)
– How you amassed your deposit (savings account statements or, if the money was a gift, some lenders require a letter confirming this)
– Do your property homework – The first stage of the house-buying process for many potential homeowners is searching online property portals, but it is important to register with such sites in order to receive notifications when new properties become available. It is also worth getting a solicitor recommendation as incompetent legal handling is one of the biggest complaints by mortgage lenders.
Barney McCarthy from Which? Mortgage Advisers said: “It is great to see confidence starting to return to the first-time buyer market and the Help to Buy scheme may well help some homeowners to realise their property ownership aspirations, but it is important to distinguish between applications and approvals.
“Lenders participating in the Government initiative are still applying the same tough criteria as before, so there is no guarantee that borrowers will be approved, even if they have a suitable deposit.
“Indeed, saving for a deposit may seem like the be-all and end-all, but there are a number of things first-time buyers can do to improve their chances of being accepted for a mortgage.
“Independent advisers can add huge value to the process by not only reminding first-time buyers of their obligations, but also by being aware of the different criteria each lenders impose and what documentation they require to complete a case.
“Independent advisers are also able to search thousands of mortgages from the whole market and not just those offered by a particular lender.”
