Being a first time buyer has its advantages and disadvantages in a market where demand outstrips supply. Typically, a first time mortgage buyer is defined as someone who has not previously owned a property. They may live at home with family or in rented accommodation. The advantage of this is they do not currently have a property to sell and as a result, are not dependent on a chain of movers and sellers.
However, 2022 so far has shown that competition for property is tough, with far more potential buyers than properties for sale. This is great news if you are selling your property, as you are likely to receive multiple offers. However, it is not such great news if you are a first time mortgage buyer who has fallen in love with your dream property – if you want to be aware of some common mistakes first time buyers make, click here.
What happens when multiple offers are made on the same property?
When a homeowner receives several offers for the property they are selling, they can:
– Accept an offer
– Counter all offers by going to best and final offers
– Reject all offers
Best and final offers happen when the seller instructs the estate agent marketing their property, to give all potential buyers a deadline for submitting their highest and best offer for the property. This gives you an opportunity to increase your offer if you really want the property.
Whilst price is important, it is not the only factor that the existing homeowner will take into consideration when they review the offers. They will also be looking at the potential buyers’ current situation.
What are the chances my offer will be the chosen one?
There were an average of 29 buyers for every available property in December 2021 according to Propertymark. Consequently, a first time buyer must do everything possible to make their offer stand out from the crowd.
Imagine that you are selling your current home and have received 2 offers from different persons buying a mortgage for the first time. They both live at home with their parents, both have the same deposit but one has spoken to a mortgage adviser and have their mortgage agreement in principle whilst the other is yet to do their research. As a seller, which offer would you choose to accept?
We see it time and time again where a first time buyer contacts a mortgage broker after they have viewed and gotten an offer on a property. As a result, this can put you at a disadvantage as the estate agent wants to see that you are ‘mortgage ready’ and fully prepared when you put your offer forward. It then leaves you panicking, trying to obtain a mortgage agreement in principle in time for your offer to be validated.
Whilst it may be exciting and fun to spend hours looking at properties for sale on Rightmove, Zoopla and other property listing sites, and much less exciting to talk about finances and mortgages, it is always advisable to obtain your mortgage decision in principle prior. This is to ensure that you can secure your dream property.
What are the benefits of getting a mortgage pre-approved?
As well as showing the seller and estate agent that you are a serious buyer, it will also save you disappointment. This is because you will be viewing properties you know you can afford and are in your price range. Imagine how upset you would be if you viewed a property and fell in love with it only to discover that you were only able to secure a mortgage for a property purchase price of £200,000 lower.
Ok, so how do I get ‘mortgage ready’ as a first time buyer?
Being ‘mortgage ready’ in essence is all about knowing you can obtain a mortgage and understanding how much you can afford to borrow. The evidence of this is in the form of a decision in principle certificate. This is also known as a mortgage in principle or an agreement in principle. It is a document confirming that a mortgage lender has indicated you can borrow up to a certain amount and are happy to accept a full mortgage application from you, based on the basic information provided.
Sounds easy enough to do it myself online right?
Obtaining an agreement in principle is something you are able to obtain yourself. However, what you must remember is that the decision in principle is only as good as the information input by the individual.
It is not uncommon for mortgage brokers to be contacted by first time buyers asking for expert help after they have obtained their own mortgage in principle, accepted an offer, and submitted a full mortgage application which has then been declined because they have not met the lender’s full criteria.
It is important to be aware that all mortgage lenders have their own lending criteria that you must meet for a full mortgage application to be approved. Examples of these criterias include but are not limited to:
– Type of income that can be used for mortgage affordability
– Type of property that is deemed to be suitable security for the bank or building society to lend on
– Previous credit history and financial account conduct (e.g. missed/late payments, County Court Judgements (CCJ’s), defaults, bankruptcy or repossession)
– Employment type (e.g. self-employed, zero-hour contracts, permanent contracts, agency workers, CIS workers)
– Amount of deposit needed
Use an expert whole of market mortgage broker!
Seeking professional advice from an experienced mortgage broker will ensure you are matched to the right mortgage lender for your personal circumstances. As a result, avoiding any stress from mortgage application declines because you do not meet the lender’s criteria.
By using a whole of market mortgage broker like us at The Mortgage Pride, you can be confident that you are viewing properties you can afford to buy based on your personal circumstances. Moreover, we ensure you are in the most vital possible position when you make an offer on your dream property.
Through our full mortgage planning service, we will also support you through the full home-buying process. This includes making an offer, choosing a conveyancer/solicitor, to arranging your insurance policies such as life and critical illness cover and income protection, that will allow you to stay in your new home long-term should the unexpected happen.
So, if you are looking to purchase your first property, do not hesitate to get in touch with us today or call us on 01782 450050!