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Contractor Mortgages & the Gig Economy

Can I Get a Mortgage as a Contractor? | MoneymanTV

Contractor Mortgage Advice in London

Nowadays there are well over a million people in the UK working in the ‘gig economy’ as contracted workers. Because this career is technically freelance and they’re working short term contracts, a lot of these people aren’t entitled to many benefits that permanent employees get e.g., sick pay or holiday pay.

We’re finding that most of these workers are either operating in some form of professional service, are both skilled and unskilled manual workers (e.g., carpenters, electricians etc.), and due to the increase of internet based shopping, many are now taking up careers as couriers and delivery drivers.

Unfortunately, gig economy workers will naturally find it a lot more difficult when trying to obtain a mortgage, because the mortgage lenders will be treating them as self-employed mortgage applicants.

Increase Your Chance at Mortgage Application Success

For you to increase your chances of having a successful mortgage application, an applicant will need to demonstrate a strong history of employment. One year’s history is probably the minimum that will be required to qualify for a mortgage, unless you have an upcoming contract set to last for quite a long duration. If your contract is due to last a few years with the same company, you may not be seen as self-employed, depending on the lender.

If a lender opts instead to treat a mortgage applicant as a sole trader, then you will need to provide the lender with proof of your net profit. This is the amount that is earned in total, with expenses taken off. For this, you may find that you need the services of an accountant.

If the person applying for the mortgage has set up their own limited company, then the majority of lenders will be making their calculations based on the total of declared salary plus dividends.

Mortgage Lender Flexibility

The way that mortgage lenders are choosing to assess contract workers seems to be a lot more flexible now, likely due to the high number of them currently existing within the economy. If a person has been working this way for a while and currently holds a contract, then depending on the industry, some may have their incomes assessed through their ‘day rate’.

If day rate is assessed, they will take that amount and then times it by 5 and times that total by 46. The reason for this, is lenders know that a Contractor is unlikely to work 52 weeks a year, even if they are not paid for any holidays they take. As such, they work off a 46 week basis. This method of calculating works well for IT contractors especially, as they have the options to choose what contracts they take and when.

Self-Employed Mortgage Advice in London

If an applicant is self-employed in London, it is advised to be organised as best as you can, collating what is needed in advance prior to applying for a mortgage in the same way that a contractor applicant would. It’s also important to remember that if you are wanting to apply for a mortgage, a potential lender will be wanting to see healthy levels of earnings that are sustainable. As such, you may end up paying a bit more tax.

Regarding the place of zero-hour contracts in all this, it is possible for someone with these who is applying for a mortgage to obtain one too. Once again, a mortgage lender will want to see 12 months’ earnings before it is possible to apply for a mortgage. They will consider taking an average of earnings, rather than a full year.

What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in London

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in London will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in London & those who are Moving Home in London. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

What Do Lenders Look for on Bank Statements?

Mortgage Advice in London

When applying for a mortgage, your lender will ask you for multiple different documents to support your application. One of the most important things that they will ask for are your bank statements.

Bank statements allow a lender to see exactly how an applicant spends their money. They will be able to analyse how often you spend your money, what you spend your money on and how much you have left each month.

Lenders want to see that someone is managing their money responsibly and will be able to maintain their mortgage payments each month. Lenders need to be confident when accepting an applicant, they will never accept an applicant that won’t be able to keep up-to-date with their payments.

What Do Lenders Look For On My Bank Statements? | MoneymanTV

What bad things are lenders looking for?

Gambling transactions

One of the first things that a lender will notice on bank statements is gambling transactions. Whether it’s a common reoccurrence or a now again gesture, gambling rarely goes down well with lenders. Of course, the more that you do it, the harsher the impact on your chances of being accepted for a mortgage with them.

In fact, if you barely gamble, it won’t really make a difference to your application, your lender will be able to see a few transactions and probably allow it. There isn’t anything illegal about gambling, however, you should know that gambling agencies always say to “gamble responsibly”.

Neither us nor the lender can never tell you how to live your life but on the other hand, we can tell you to be responsible and be aware that you may struggle to get a mortgage if you are frequently gambling and losing monies in large sums.

You have to think as if you were in their shoes. Would you lend money to someone who gambles frequently or someone who never gambles? Lenders will only lend to a borrower that is reliable.

Dipping into your overdraft

Lenders will not be impressed if you are consistently dipping into your overdraft. If you are only touching your overdraft now and again, your lender may not be too fussed by it, however, if it’s every single month, your chances of being accepted for a mortgage may be lowered. To make matters worse, if you are exceeding your overdraft limit every month, lenders will not take this lightly and could even be completely put off.

As you know, another thing that lenders look for on your bank statements are gambling transactions. If you are dipping into your overdraft because of gambling, lenders may have little interest in your application. Having a combination of the two leading factors to why lenders turn away applications on your bank statements unfortunately never ends well.

Loan repayments

Showing that you are capable of repaying loans on time is a good indication that you are reliable. If you are managing to meet your payments easily, it will always look good on your application.

Furthermore, this can backfire though if you are taking out too many loans. Yes, it can be good to pay off loans to show that you can manage your finances to meet the payments, however, it also shows that you maybe didn’t have the money at the time that you applied for the loan and you hoped that you would be able to pay it off when the time came. Once again, as a Mortgage Broker in London, we advise that you be cautious with your finances and take a smart approach.

Bounced direct debits

Bounced direct debits occur when pre-arranged fees are charged on your account and you don’t have the sufficient funds to pay the fee. For example, if you are on a mobile phone contract, you will have a recurring bill which is usually monthly. If you forget about this bill and end up spending the money that you needed to save, the provider will try and take the money from your account despite it have nothing in. This will show up as a bounced payment, and if it happens regularly, your lender may think that you are unreliable.

This doesn’t just apply for mobile phone bills, it also applies for credit card charges, memberships/subscriptions and basically anything that you’ve made a pre-arrangement to pay back.

To summarise bounced direct debits, make sure that you are keeping up-to-date with your ongoing financial commitments and that you are meeting bills and fees before their due dates.

What good things are lenders looking for?

Managing your finances

Now that we’ve covered the things that lenders don’t want to see on your bank statements, let’s take a look at what they want to see.

Firstly, they want to see that you can manage your finances. This could mean clearly evidencing your savings and showing that for the past 3 months you’ve been putting money into a savings account and not taking any back out. It could simply be that you have lots of spare cash left at the end of the month, either way, this will look good and should impress your lender.

Tax payment planning, prudent spending and budgeting your expenditures are different ways to help you manage your money. The more cash that you have remaining at the end of the month, theoretically, the better mortgage deal you should be able to access.

Evidence

A lender can be impressed by your bank statements, but where is all of the money coming from?

You’ll need to evidence where your money is coming from, e.g. your income and bank transfers. This does work both ways though, if there are large transfers going out of your account, you will need to back them up too. On another note, if you are Self Employed in London you will need to evidence your latest 2 years’ tax calculations and corresponding overviews.

Evidencing your deposit is a huge part of your mortgage application and so is evidencing incoming and outgoing lump sums of money that appear on your bank statements. If you can evidence these with no hassle, your lender should gain more trust in you and your application, making you more likely to get an offer.

How can I improve?

As a Specialist Mortgage Advisor in London, we always advise applicants to plan ahead and always be sensible. Think responsibly and make sure that you are making yourself look the best that you can.

Remember that your bank statements will show your salary credits, your regular bill payments and your bank transfers. With this in mind, it’s very important that you make sure that everything is evidenced and paid off. It may even be worth taking a break from gambling during the months leading up to your mortgage application in London; your bank statements will be put into the best light possible this way.

If you need help during the mortgage application process and want assistance in making your bank statements show your reliability, feel free to get in touch with our Mortgage Broker in London.

How to Improve Your Credit Score in London?

Credit Score Mortgage Advice in London

How to improve my credit score? | MoneymanTV

A credit score is a numerical expression based on a level analysis of a person’s credit files to represent an individual’s creditworthiness. Lenders use this numerical expression to determine your affordability for a mortgage, loan, credit card, and the rest. Although different lenders have different credit scoring criteria, the credit score listed on your file will usually range from 300-800+.

Credit score criteria

???? 300-580 – This is an example of a poor credit score, and having a credit score like this may minimise your chances of being accepted by a lender.

???? 580-670 – A score like this is deemed fair, and some lenders may be more lenient with you when you have a score alike.

???? 670-740 – This is a good score, and your odds of being accepted will be high if you have this score on your credit file. We tend to find that this is usually the average credit score range.

???? 740-800 – This score is excellent. A score as good as this will put your chances even higher of being accepted.

???? 800+ – If you have a score that’s 800+, that is a perfect credit score. Your chances of being accepted are well above average; well done!

If you have a credit score above 670, a lender will likely see no problem lending to you. On the other hand, if your score is less than 670, you may struggle to get the competitive deals that other applicant’s with a higher score are accessing.

Reasons why your credit score may be lower

Our team of Specialist Mortgage Advisors in London have dealt with an extensive array of cases daily. It’s often the case that mortgage applicants come to us after being declined by their bank due to a low credit score or something similar. Their job is to step in and assist wherever they can to get your application mortgage ready.

There are various reasons why you could have a low credit score. The most common understanding that we come across is that the applicant is the subject of a county court judgement (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 harmful impact on your credit file for up to six years or more. We strongly advise that you make sure that you pay off your debt before applying for credit. It will surely pop up on your file, and the lender will start asking questions.

Can I get a Mortgage with a CCJ?


Neglecting to stick to credit agreements can be bad too. Anything like failing to keep up with a Mobile Phone contract can cause damage to your file. It’s the little things like this that can cause substantial damage. For example, dipping into your maximum arranged overdraft every month could cause a long term adverse effect. Even using loads of price comparison websites can sometimes affect your score.

Poor credit score? Don’t Panic

These are just a few things that could negatively impact your credit rating, and there are lots of other reasons why you could have bad credit. However, our mortgage advisors in London job is to help you develop your score, so you get the chance to move into your dream property!

There are multiple ways to improve your score. But the most crucial part is not to give up just because you have a low score because it’s still possible to secure a mortgage in some cases.

Credit Score Mortgage Advice London

Improving your credit score in London

Trying to improve your credit score can be a challenging task, that’s why we hope that this handy guide can give you some indication on how to improve it. We must inform you that every lender has there very own lending criteria, so your score may impact what deals you can access.

Additionally, it also means that just because you have an excellent score doesn’t mean that you’ll match every deal. It’s sometimes down to personal circumstances. It’s all up to your lender and their criteria.

Avoid unnecessary credit searches

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 gets 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.

Avoid credit applications

Applying for credit can sometimes ricochet 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 at Cambridgemoneyman, we aim to get it right the first time, which means that we will take a look at your credit score and only approach lenders that hold criteria that we know you’ll pass.

Are you registered on the voter’s roll?

Here’s an easy way to improve your credit score; make sure that you get registered on the voter’s/electoral roll. Being registered on the roll shows that you are who you say you are. All you need to do is go to the government’s electoral roll page, and it’s easy to get registered from there. Additionally, this could be a great way to boost your score.

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.

The importance of updating your address

We always recommend checking that all of your accounts and details get linked with your current address during the mortgage application process. Additionally, this won’t affect you as much if you are a First Time Buyer in London and this is your first application.

However, if you are Moving Home in London 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. That’s why it’s essential to change your addresses and make sure that it’s up-to-date before applying. Being linked to the wrong address could impact your credit score.

If you go down the broker route, your Mortgage Advisor in London will help you out with this step. They will make sure that everything is updated with you to ensure that you have the best chance possible of being accepted for a mortgage.

Don’t run too close to your maximum limit

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 always dipping into your overdraft, they may think that you don’t take your finances seriously.

Remove financial links to others

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 remove your connection is to get in touch with the credit reference agencies and make a request.

Is it all about your credit score?

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, and it’s entirely up to them what they do.

A Mortgage Broker in London 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 hardworking team of Mortgage Advisors in London are 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. If you need further assistance or Credit Score Mortgage Advice in London, feel free to get in touch with our team.

Should I Use My Estate Agent’s In-House Mortgage Advisor?

Estate Agent Mortgage Advice in London

When you start your mortgage process, if you choose to use a large estate agent, they will want you to use their in-branch Mortgage Advisor and their recommended conveyancers. You don’t have to use their in-house advisor however, in fact you can still get the same or better deals from somewhere else! Unfortunately, First Time Buyers are often the ones that get caught out and end up coaxed into using their internal services.

Searching for an external Mortgage Advisor in London could be the best path for you to take. An estate agent’s advisor will be biased, only encouraging you to see their side as they just want you to stay on with them. A dedicated mortgage broker in London will be able to give you more perspective and see different sides. If you do your research and still end up back with your in-house advisor, that’s fair enough, though you should always remember that you have other options out there.

Our view consists of both transparency and efficiency, as we want to provide the best possible experience and the best advice for your personal and financial situation, whilst still delivering a fast yet friendly service.

Sales tactics of estate agents

If you end up choosing to use your estate agent’s in-house mortgage advisor and conveyancer, you need to think about where the cost of their service is coming from. Maybe they are charging you for their services without asking you and adding it to other fees, so that you don’t notice. Taking the route of a trusted mortgage broker in London will eliminate these concerns, as you know exactly what you are paying for. Your dedicated advisor will break each cost down for you and answer any questions of uncertainty you have with what’s going on.

Even though it is an illegal tactic, if you have opted not to take the estate agents in-house mortgage advice, they may refuse to put your offer forward on a property. For example, you could be using a broker and they may push another offer to completion over yours, purely on the basis that you aren’t using their services. Once again, these situations are illegal.

Estate agents may get even craftier and try to charge you with extortionate in-house conveyancing fees. Even with a straightforward purchase, they could try and charge you with fees upwards of £1,500. If you encounter anything like this during a purchase, you have all rights to ask them where they have got these prices from and for them to provide a full breakdown of everything.

An experienced mortgage broker in London only has your best interests at heart, and all of this can be avoided by going to one over an estate agent for mortgage advice.

How can I get a Mortgage in London?

Finding the right Mortgage Advisor

Choosing the right Mortgage Advisor can be hard; but is there a way to make it easier?

Sometimes your case will be specific and might require specialist care and attention. An estate agents in-house advisors don’t care about this and just want to make money off you. When you Get in Touch with a mortgage broker in London, you can be matched up with a specific advisor who has experience in that field.

For example, we have specialist buy-to-let mortgage experts who can be called upon if a buy-to-let enquiry is presented to them. Once you’ve had a free mortgage consultation and an agreement in principle (usually turned around in 24 hours or less), you could be linked with your perfect advisor and get a head start on your mortgage process..

We have years of experience providing mortgage advice in London and have been helping struggling customer take that leap into the mortgage market for over 15 years now as a company. You can find out more about our excellent mortgage advice service by looking at our fantastic customer reviews.

Getting behind the wheel to start your own mortgage journey

If you would rather “go it alone”, you should know that it’s perfectly okay to do so. The majority of things you need can now be done online! Along with the use of price comparison websites, you may be able to find yourself the most appropriate deal.

The benefit of doing things online is that you have the chance to save money on additional fees. As long as you are confident in what you are doing and know what you are looking for, you could complete the process very quickly.

One thing to note though is shopping around and comparing online may be a little harder than you think. You will need to make sure that you’ve found the most appropriate fit before agreeing to anything. Here are some things you should be wary of when choosing to find a deal by yourself:

  • Do you have the ability to match the criteria for the “Best Buy” rates? Check before applying, as if you are declined, this could negatively impact to your credit score.
  • Have you researched properly? Many of these comparison sites earn a commission from lenders and where there is no commercial relationship with a lender, they may choose to just not include certain deals on their list.
  • If it goes wrong, it could cost you a lot of money. Be aware of valuation and applications fees if you are not 100% certain that you have been accepted. These fees will not be refundable.
  • You will solely be responsible for progressing your application and also sorting out any problems if you encounter any future issues.

Should I use my Bank or a Mortgage Broker?

Using your bank’s Mortgage Advisor

It isn’t difficult to make an appointment with your bank’s Mortgage Advisor, however, it may not be the right choice for you to make. If you do choose this route, here are a few things you should keep an eye out for:

  • They won’t shop around for the best deal; they can only offer their own deals; some of their deals may not suit you at all! They also won’t tell you about other mortgage lenders cheaper rates.
  • You might be declined, even if you’ve been a longtime customer of that bank, regardless of length of time. We’ve seen customers of 20 years still get turned away for “lack of information”.
  • There can often a long waiting list for a mortgage appointment, with some lenders making customers wait around 6-months for an appointment.
  • Your bank may have inexperienced advisors on their team and therefore are unable to help with more complex cases. This is why many people get declined, as instead of solving the issue, banks instead just turn customers away.

Using a Mortgage Broker in London

Working alongside a mortgage broker that is not associated with the estate agent ensures you have someone working purely on your behalf as an inexperienced First Time Buyer in London. This also ensures there’s no conflict of interest risks.

Everything will be kept between you and your designated Mortgage Advisor in London. We have no external ties to any building societies, banks or estate agents. When we work, it’s solely for you and only you. Whilst we have lenders on panel, they’re purely there for the deals they offer, allowing us to find the most appropriate case for your case.

Our team have your best interests at heart. Managing Director Malcolm Davidson is here to explain the pros & cons of using a dedicated mortgage broker:

Why Should I Use A Mortgage Broker? | MoneymanTV

Need a Mortgage Agreement in Principle in London?

What is an Agreement in Principle | MoneymanTV

An Agreement in Principle (also known as an AIP or Decision in Principle) is where you pass a Lender credit score to qualify for a mortgage.

By obtaining an Agreement in Principle, you prove that you are ready to support any offers you make as a First-Time Buyer in London. It may also aid in negotiating a lower price if you have one of these as it shows the seller you are serious and have the means to continue with the process. 

Will obtaining an Agreement in Principle affect Credit Score? 

The more frequently seen methods of credit scoring are via soft searches, rather than a hard search. These may still affect your credit score, though usually a hard search will be more likely to do this than a soft search.

The reason for this, is that a hard credit search leaves a credit footprint, whereas a soft search does not. Regardless, you can rest assured that whichever is used by the lender, is done with the best intentions.

Should I avoid hard credit checks? 

Having your credit checked via a hard search every so often should not make too much difference. It becomes an issue if you take too many of these within a small amount of time.

On the flip side, if you know you have a good credit score and it’s the best path to take with a lender, this should not be a problem.

Is an Agreement in Principle a guarantee that I will get the Mortgage? 

Whilst the prospect of this would be nice, there are no guarantees that having an Agreement in Principle will allow you to get a mortgage. The Lender will still require seeing all your documents and only then will an Underwriter make very final decision.

Often we find that customers contact us after they have been declined at application stage, due to missing some small print in their Agreement in Principle. You will need to provide ID to prove that your identity, payslips to prove your income and bank statements to prove you are smart with money, before a lender will offer your case.

Can I make an offer without an Agreement in Principle? 

Though you are able to make an offer without an Agreement in Principle, we would not suggest doing so. Any credible Estate Agent will want you to prove you can definitely go forward.

How Long Does it take to get an Agreement in Principle? 

It is possible to obtain an Agreement in Principle within 24 hours of getting in touch with an experienced mortgage advisor in London.

How Long Does an Agreement in Principle Last For?

Typically,an Agreement in Principle will expire after 30-90 days. The good news is that this doesn’t mean you should just apply for the first house you find. If your Agreement in Principle expires, it’s not a difficult task obtaining another ahead of making an offer.

Finding a mortgage only to be declined a mortgage can cause understandable disappointment. With this in mind, we recommend getting an Agreement in Principle as early as possible.

Getting Prepared for a Mortgage in London

First-Time Buyer Mortgage Advice in London

So you’ve done great thus far and saved a majority of your deposit, now what’s next? It’s time to get prepared for a mortgage! Below is a list of some helpful advice for First-Time Buyers in London, in order to help you be prepared for a mortgage ahead of time.

How to get prepared

Up-to-date credit report

Once of the most important things that you should do first, is make sure you get an up-to-date credit report. This is key, even before you get in touch with a mortgage broker in London. It’s always smart to ensure you have paid off any outstanding payments you have, even if you’re holding off for matters of principle – Whether it’s your responsibility or not doesn’t factor into your credit report, and if it is unpaid, it will go against you. Ensuring these are paid off will increase your chance of obtaining a mortgage!

It’s handy to to make sure you’re on the voters roll, as it would seem that also has a positive effect on your credit score. Closing down old credit cards helps too, so make sure you do that. Your dedicated Mortgage Advisor in London will be able to run through your credit report in the early stages, providing expert advice on the different ways you can make sure you have a great credit score!

Proof of identification

Once you kickstart the home buying process, you’ll be asked to provide some photograph ID. Our customers usually provide things like a driving license or passport.

Your driving license can be used for your address too, though this is limited to be used for one of the options. What this means is if you’re using it for photo ID, you’ll need something else to assist with proof of address and vice versa. Any non-UK nationals now residing in the UK will need to show us a copy of their Visa as well to be able to proceed.

Proof of address

As mentioned, you’ll also need some documents that can prove where you live. The standard option for these is a utility bill or original bank statement that is dated within the last 3 months. Alternatively, like we said in the proof of ID section, you are able to use a passport or driving license for proof of address, but it can’t be used for ID as well if you do this.

Last 3 months’ bank statements

Your bank statements should document your income and regular spending habits. It’s preferable that you don’t get too carried away leading up to this with things like gambling, no matter how innocent, as the lender may hold them against you. The same goes for going past overdraft limits and letting direct debits bounce. You must make sure you’re prepared.

The majority of lenders will ask to see your bank statements, as it gives them confidence that you take your finances seriously. The bank statements usually needed will showcase income coming in and bills going out.

Evidence of deposit

As a First-Time Buyer in London, you will have to prove you have a saved deposit and document where this came from, for the purpose of anti-money laundering. It’s always best practice to limit moving money from account to account, as it makes evidencing the audit trail trickier. Lenders prefer to see your savings building up over time, so you’ll also have to prove and explain the appearance of any large deposits, say if you’ve sold a car recently.

In recent times, we often see that deposits are gifted by family members and is the most popular way forward for First-Time Buyers in London. These need to be evidenced also, with the “donor” being required to sign a letter confirming you do not need to pay this back.

Proof of income

When it comes to something like affordability, the most important thing is proof of income. Usually you will be required to show the last 3 months of payslips if you’re employed, with some lenders needing to see your most recent P60. Lenders may also take into account regular overtime, shift allowance, bonuses and any commission you make. If you have more than one employer (maybe you have a part-time job or are self-employed), lenders will also accept the earnings from each of those.

Nowadays, many applicants are self-employed and in need of expert Mortgage Advice in London. Self-Employed applicants will need the help of an accountants to request their last 2-3 years’ proof of earnings from the Revenue. Our trusted Mortgage Advisors in London are able to talk you through what to download from the Government Gateway if you happen to control your own accounts

Budget planner

It’s always worth doing your homework and taking the time to write down an estimate of what your outgoings might be after you move to your new home. This helps put into perspective how much your council tax and utility bills will be, plus regular expenditures like food, drink and travel. It’s also able to show how much disposable income you’ll have free to use as payment towards your mortgage. Our team can send you our version of a budget planner before we go forward with our appointment, which will hopefully be able to help with this.

Getting prepared For a Mortgage in London

As you can see from all of the above, getting prepared for a mortgage is not always the easiest, but is far from impossible! If you put in the hard work from the start, staying patient and being careful, it hopefully won’t be too long, before things start working in your favour.

Mortgage Market Update: Biggest Surge in Lending Since 2007

Mortgage Advice in London for 2021

Following on from the recent announcement made by British Prime Minister Boris Johnson, we felt it appropriate to share some positive news that came with the new lockdown rules.

Much like during the November 2020 lockdown, the property market is still open for business as usual. You are still able to take up house viewings, continue your purchase and put your home up for sale.

Below, we have a mortgage market update from the ‘moneyman’ himself, Malcolm Davidson:

Lockdown 2020 and obtaining a mortgage in London

Throughout the last lockdown, back during November 2020, there was a significant increase in the amount of mortgage enquiries banks and brokers were receiving. The boom in purchase approvals for homes reached an outstanding 105,000 in November, which was the highest recorded figure since August 2007.

Graphic: UK Moneyman | Source: Bank of England

In October 2020, purchase approvals were at 98,300. This increase of 6,700 is impressive when you think about where we were, working through the middle of a nationwide lockdown.

Obtaining a mortgage in London during Lockdown 2021

In terms of the property market, the January 2021 lockdown is currently working on a similar level to the previous one we experienced back in November 2020. You are still very much able to start your mortgage journey in 2021. How you start this is completely your call.

Whilst some take the route to do this themselves, accepting the help of a dedicated and experienced mortgage broker in London can reduce stress, time and the possible cost of the matter, depending on what you’re looking to do.

January is always a popular time of year for First Time Buyers, Home Movers, landlords and so on, with more mortgage products becoming available again as time progresses. This is allowing for more mortgage options to those looking to invest in the property market.

90% mortgages are still available

Yes, thankfully 90% mortgages are still available and lenders are getting more and more confident in the UK property market over time. They know that the demand for properties and mortgages is still alive and well, and that people will only start coming back when they are confident that they can get a deal with a 5-10% deposit.

There are also other ways to access a 90% mortgage, through something like the Help to Buy Equity Loan scheme or the Help to Buy Shared Ownership scheme. If you want a Help to Buy Specialist to walk you through the process, explaining how these methods could help you obtain a mortgage with only a 5-10% deposit, make sure to get in touch and a mortgage advisor in London will assist you how in any way they can.

We are open as usual!

The property market is still open, which means Londonmoneyman is ready for business as usual! We have a team of dedicated Mortgage Advisors in London available from 8am – 10pm, 7 days a week, all throughout the year to help you along your property owning path to a mortgage.

Don’t worry, we still offer a free initial mortgage consultation to all customers who get in touch, no matter the situation.

Londonmoneyman.com & Londonmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

© 2021 Londonmoneyman

Londonmoneyman, Unit 3A, 34-35 Hatton Garden, Holborn, London, EC1N 8DX, UK

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