Steps to buying a home
Struggling to secure your mortgage can become increasingly frustrating and numerous applications could affect your credit record. To fully prepare for your mortgage application, it is vital to ensure that your finances are watertight. There are several steps that you can take to achieve this.
In this article, we have listed the nine key steps to securing a mortgage and buying a home. For more information about mortgage applications or deals, contact Eden Hawk Financial Solutions today.
- Seriously save for your deposit.
Before even considering applying for your mortgage, you’ll need to put money-saving skills into action and gather an appropriate deposit. The larger the deposit you have available, the better mortgage rates you are likely to receive.
Each mortgage has a loan-to-value ratio (LTV). This indicates the proportion of the property to be covered by the mortgage. For example, an 85% LTV mortgage requires a 15% deposit. When saving for a deposit, property buyers should aim to amass a deposit that reduces their LTV as much as possible in order to be eligible for the best mortgage deals.
- Find a mortgage broker
Finding an insightful mortgage broker as early as possible will help you achieve many of the required milestones. Whilst obtaining a mortgage can typically be a complicated process, your broker will simplify each step, making it digestible and stress-free.
A mortgage broker can be influential from the outset of a property purchase. They will guide you in selecting the appropriate mortgage type, setting your mortgage term and completing your application.
Rather than facing stressful obstacles alone, working with a mortgage broker like Eden Hawk Financial Solutions can make the mortgage process simple and satisfying.
- Work out your borrowing budget.
Calculating a borrowing budget is helpful for determining the price bracket of properties you can afford. Our top tip is that the majority of lenders will approve loans up to four and a half times the combined annual income of borrowers.
Whilst there are affordability checks that each borrower must pass, calculating your budget can provide a guide for your saving goals and expectations.
- Decide whether you are mortgage ready.
Before formally applying for your mortgage, it is important to address your spending habits and change anything that could negatively affect your application. Any consistent spending, such as subscription payments, holidays, and luxury item purchases, could affect your eligibility.
Lenders will determine how you use your money and how this affects your ability to make regular loan payments. Credit scores and outstanding debts will also considerably affect your chances of approval. Repayment of outstanding debts and correcting mistakes on your credit report could increase your chances of approval.
- Get a mortgage agreement in principle.
A mortgage agreement in principle is not a formal offer of a property loan. Instead, it is an obligation-free insight into your current financial situation and credit history. The document provided by your chosen lender indicates that they would be willing to grant you a mortgage following a formal application based on the information provided on your current income and expenditure.
The benefit of having a mortgage agreement in principle is that it can significantly speed up the property purchase process. As a buyer, holding a mortgage AIP demonstrates that you are a serious candidate for purchasing a property. You will become a far more desirable buyer to estate agents and sellers as you offer the potential for a complication-free purchase process.
- Prepare the paperwork.
When applying for a mortgage, your chosen lender will require a number of documents to establish your identity and financial eligibility. These often include:
- Photo ID (such as a passport or driver’s licence)
- Three to six months of bank statements
- Three months’ payslips and/or P60
- Utility bills
Self-employed individuals also require further documentation, as establishing a regular income can often be difficult. The following documents may be requested:
- Minimum two years’ accounts
- Two years self-assessment tax return forms (SA302)
- Two-year overviews from HMRC
- Complete the mortgage application.
The application process can seem complicated but your lender should provide you with instructions to complete their specific application process. Your mortgage broker will also provide guidance during this time.
Completing the application correctly is vital, as any errors could lead to delays in the property purchase. An experienced broker will prevent this by ensuring the information you provide is valid.
- Await your formal mortgage offer.
Within two to eight weeks of submitting your mortgage application, you will receive a response from your lender. If you are successful, your solicitor can finalise the details of your purchase, leading to the completion of your property purchase.
An approved offer is typically valid for up to six months, providing ample time to complete a property purchase. Most property purchases take an average of 12 weeks from offer acceptance to completion. However, certain circumstances can push this timeline to indefinite lengths. If you are involved in a property transaction that extends beyond your mortgage offer, you should let your broker or lender know as soon as possible so they can extend your offer or advise you of the correct action to take.
- Completion
Once you have exchanged on a property, the final step is completion! On the day of completion, your solicitor will request the funds to be transferred from your lender into the account of the property seller. Once these funds have been received, the seller will hand the keys to the estate agent and you will be contacted once they are available for collection. You are then free to move into and enjoy your brand-new home.
Final Thoughts
The mortgage application process can be pretty complicated if you are inexperienced. There are plenty of complications that can occur, which makes it vital that you are well-prepared. Here at Eden Hawk Financial Solutions, we understand the most effective way to secure your mortgage and make sure the process is hassle-free. Contact us today for professional and friendly support throughout the mortgage application process.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE.