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.
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!
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.
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.
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.
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.
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
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.
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.