Do you dream of unlocking the door to your own home for the first time? Are you already picturing colour schemes to make your dream house your home? Are you longing for a space to call your own?
We all have our own reasons for buying our first home and we understand how important it is to put you in the strongest position when you spot your dream property.
Here are seven common mistakes often made by first time buyers so you can avoid making them and get mortgage ready.
- Not being registered on the Electoral roll!
This information is included in your credit report and is often used by mortgage lenders to confirm your name, address and previous address history. If you are not registered, your mortgage application may be delayed and/or your credit score impacted.
- Missing payments or making payments late
If you are late making your monthly payments on your credit cards, utility bills, mobile phone contract, or other financial commitments you have, this will be recorded on your credit report and your credit score may be affected. Missed or late payments may limit the mortgage options available to you, especially if they are recent. It also may result in you needing a larger deposit.
After all, your mortgage is often your biggest debt and largest monthly financial commitment you have. A mortgage lender wants to be confident that you can borrow money and repay it on time.
- Not checking your credit file
Make sure you obtain a copy of your up to date credit report. This will help you and your mortgage adviser to gain a picture of the information a mortgage lender will have access to.
It can help identify potential barriers that my lead to your mortgage application being declined, such as missed payments, defaults or County Court Judgements (CCJs) you were potentially not aware of.
By knowing what information is included in your credit report, we can accurately match you to the most suitable lender, taking this information into consideration in advance of submitting a mortgage application.
- Applying for new finance in the months leading up to buying a property
Lenders complete an assessment based on your affordability at the time of application. They want to make sure that the mortgage is affordable long-term for you and will include your financial commitments such as personal loans, credit cards and hire purchase agreements into the affordability assessment when they receive your mortgage application.
Mortgage lenders may complete an additional affordability and credit check prior to releasing the funds to your conveyancer, ready for completion. Any new finances will result in your application being reassessed and could possibly lead to them declining the mortgage if they feel that the new finance makes the mortgage unaffordable.
- Taking out pay day loans or other short-term borrowing
Pay day loans and short-term borrowing is often a last resort due to the higher interest rates involved. This type of borrowing may indicate that an individual may not be able to manage their money effectively, especially if there is a history of this type of borrowing.
As a result, many mortgage lenders may exclude applicants with a history of pay day loans or other types of short-term borrowing.
- Falling in love with a property before seeking mortgage advice
Imagine finding your ideal home and then being told you cannot afford it. Unfortunately, this scenario is one we come across far too often.
You can avoid this heartbreak by speaking to a professional, whole of market mortgage adviser before you start property hunting. This will mean that you understand what you can afford to borrow and how much this will cost you, so you know exactly what price range of properties to look at.
- Thinking that you can afford the maximum amount you can borrow
Mortgage lenders will often give you a maximum amount you could potentially borrow for a mortgage. However, this is not the same as what you can afford on a monthly basis.
Remember, a mortgage is often the largest monthly financial commitment you will have so it is important to make sure you can afford the monthly mortgage payment long-term.
A good mortgage adviser will make sure that the associated monthly mortgage payment is affordable to you based on your budget. This will then give you a more accurate maximum amount that you can borrow.
With over 15 years’ experience of helping first time buyers, we understand the common pitfalls when buying your first home. The Mortgage Pride’s bespoke mortgage planning service allows us to navigate you safely and smoothly through the home buying and mortgage process, one step at a time.
*Your home may be repossessed if you do not keep up repayments on your mortgage.
**A fee may be payable depending on your circumstances. Our typical fee is £495.