First Time Buyer Mortgage Bath
Welcome to the First Time Buyer Mortgage Bath education hub.
This web page will provide all the information you need as a first time buyer in Bath. But you will also find it useful if you’ve made your way here from the pages helping doctors, or other local clients in Chippenham, Corsham or Malmesbury.
First Time Buyer Mortgage Bath - The Basics
What is a mortgage?
A mortgage is a loan from a bank or building society that is secured against a property. When buying your first home, you won’t normally be able to get a mortgage for the full purchase price. And will need to use some of your own money as a deposit.
How much deposit do I need?
Most first time buyers will normally need at least a 5% deposit. So if you’re buying a £300,000 home you will need to have saved at least £15,000.
This amount may need to be higher depending on your credit history, the type of property you are purchasing or if your income means you can’t borrow enough.
It is possible for parents to help with a deposit. And in some cases mortgage lenders can use parents property as extra security if you don’t have enough deposit.
Are there any other costs?
Yes, you will need to pay a solicitor or conveyancer to help you purchase the property. And you will also want some money to help you redecorate and refurnish when you move in. Plus a bit of a rainy day fund and some emergency savings.
You will probably need around £2000 to cover the legal work. But shop around. Think about whether there is an additional stamp duty liability. And remember the cheapest quote isn’t necessarily going to be the best.
What's a solicitor?
A solicitor or conveyancer will help with the legal side of purchasing a property. Dealing with the registration of your name with land registry, the mechanics of getting the money from your mortgage lender and ensuring everything is above board with the new purchase.
There are online solicitors, local solicitors, a hybrid of the two. Do your research and ask for recommendations from friends/family/colleagues etc. to ensure you’re getting the solicitor that’s right for you.
What is stamp duty?
Stamp duty is a tax that you must pay to the government when you are purchasing a property. There are a few exemptions at the moment for first time buyers. Especially if you are buying for less than £300,000. It’s worth taking a look at the HMRC website for more information. Or speaking to your solicitor/conveyancer.
How much can I borrow?
As a general rule, most mortgage lenders will allow a first time buyer mortgage to be between 4 & 4.5 times your salary. If you’re looking to borrow more than this, it’s going to be worth speaking to a mortgage broker to understand the options available to you.
There are plenty of calculators online that will tell you how much you’re able to borrow. But they’re only as good as the information you put into them. Forgetting about student loans, lease payments, pension deductions and many more could leave you disappointed when you finally need to apply.
First Time Buyer Mortgage Bath 1-2-1
Do you want to understand more about the first time buyer mortgages available to you? And whether you trust me to help you sort one? I would love to be able to help.
There’s no formal requirements for a Mortgage 1-2-1. It’s an informal chat to discuss your circumstances and how I can help. But it may be worth having the following;
Latest three monthly payslips.
Up to three years self-employed figures (if applicable).
Monthly payments & balances for credit cards/loans etc.
Details of existing life insurance policies.
Keep scrolling to arrange a convenient time to talk.
Why I setup the First Time Buyer Mortgage Bath Education Hub...
I wanted to answer some of the more basic questions, and give an insight into the overall process. So you have the confidence to pick up the phone and start a conversation with me.
First Time Buyer Mortgage Bath - The Process
Understanding your budget
The first thing you should do is get to know your budget. And how much you can afford to borrow. As mentioned above, there are calculators online that will give you a rough idea of how much you can borrow. Add your deposit onto that figure and you’ve got your maximum purchase price.
That’s a rough guide of course. But most mortgage brokers will offer free initial appointments to explain your options and calculate this more accurately. I do this as part of my Mortgage 1-2- which I’ve outlined above.
Do I need an agreement in principle?
Agreement in Principle. AIP. Decision in Principle. DIP. Mortgage Promise. Whatever you want to call it… do you really need it?
Here’s my unpopular opinion. No you don’t.
Most people with more than a 5% deposit will find it fairly straightforward to pass a credit score if they’ve never had any credit issues in the past. Like missing payments, defaults, CCJ’s or bankruptcy. If you don’t know what those things are, it’s probably a good thing.
Add to that, most are only valid for 30 days. They leave a footprint on your credit file every time you apply for one. And that could affect your ability to get a mortgage when you need one. I don’t think it’s worth doing immediately.
Most estate agents would prefer you’ve spoken to a professional mortgage broker about your situation than been able to fill in a few forms online.
It’s a nice way for the banks to make you think you have to use them for the mortgage once you’ve found a property as you’ve been “pre-approved.” But most mortgage brokers don’t follow this tactic.
Now if you’ve a limited credit history, recently moved to the UK, had credit issues in the past, or there is something else unusual about your situation it may be worth doing an application sooner.
But for most people. A conversation with a mortgage broker would be a lot more valuable.
How do I plan my move?
Once you understand your budget and have had a conversation with a mortgage broker, you’re ready to start looking at properties and speaking to local estate agents.
The main property sites are RIghtmove, Zoopla, Prime Location & On The Market. If you have a smart phone you will probably want to download those app’s if you haven’t already.
Not every estate agent uses every site. So you’ll want to keep an eye across all four. It’s also worthwhile setting up notifications from these apps and registering with local agents to keep informed of new properties coming on to the market.
You may find some estate agents try to make you speak to their “in-house” mortgage brokers. You don’t need to do this. They can’t force you too. And speak to the broker you’re working with if this happens to you.
So you’ve found a property you really like and want to make an offer. It’s then worth touching base with your mortgage broker again to reconfirm what you’ve discussed before.
If you were working with me, I would put together a letter confirming how long we have been working together and that I would have no concerns about your ability to purchase the property at the offered amount. And that if the price was agreeable we would proceed with a full mortgage application at the earliest possible convenience. You would be able to supply this with your offer to make you look like a serious buyer.
You could make the offer in person, over the phone, or in writing. It’s really up to you?
Once you have agreed a price for a property. You will need to proceed with a formal mortgage application as soon as possible.
You will need to provide proof of your name, address, income, outgoings & deposit. And the mortgage lender will want to assess the property to make sure the price you’re paying for it is right. And that it is suitable security for the loan with no substantial issues.
On average, this process can take around 3-4 weeks but it is often completed much quicker than this.
The Legal Process
The legal process normally takes a bit longer than the mortgage. On average it takes around two to three months to purchase a property.
There’s going to be some patience required. And potentially a lot of chasing of other parties in the process. But the solicitors are doing the important job of making sure your purchase is all above board.
It’s worth having a proper conversation with a few different solicitors to fully understand what they do and how they work.
Once you move in, there are a few extra things you may want to know…
Can I move home in the middle of my deal?
Yes. Mortgage lenders will allow you to transfer your mortgage to a new property. But it is subject to meeting all of their lending criteria at the time. So there are no guarantees.
Can I let the property out?
Normally not. You have bought a new property to live in. So if you were to start letting out the property you would be breaching the terms of your mortgage which could lead to the home being repossesed.
There may be some exceptions for lodgers under the rent a room scheme. Or you may be able to ask for permission to let the property out if your situation changes significantly.
What happens at the end of my deal?
If you do nothing at all, you will move onto the mortgage lenders standard variable rate. Which will normally cost you too much.
If I arrange your first mortgage, I will be in touch 4-6 months before that deal ends to help renegotiate and ensure you’re always getting a good deal.
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How you can protect yourself in the event of death or ill health?
Alongside sorting the mortgage, it’s really important to consider the impact a loss of income through death or ill health would have on your lifestyle.
It’s difficult to write about protection. There’s lots of jargon and industry language that makes it hard to explain in a few paragraphs. But as you view more and more houses and things get more serious, so will the protection conversations. The good news is that It’s much easier to pick up the phone and have an open conversation about these things.
Doing the right thing when it comes to protection also forms one third of our sustainability policy.