Newcastle mortgage brokers and advisors for first time mortgages

Most first-time buyers tend to be over-excited about their first purchase, and they can quickly lose sight of any realistic perspective. While there are plenty of mortgage offers available for first-time buyers, lenders still implement a rigid set of criteria on prospective borrowers.

They also have to think carefully about the overall cost of property acquisition. Buying a home does not end with securing the deposit; there are far more costs involved along the way such as legal and mortgage fees, along with moving expenses and Stamp Duty, if applicable.

Most lenders tend to accept a borrower only if they have a good credit history. Hence, it is vital for first-time buyers to get their credit records checked, identify if there are any issues or anomalies, and resolve them as soon as possible.

Should there be any case of late or missed payments, a letter of explanation should be provided to avoid any complications. Moreover, it is also essential for individuals to keep an updated address history and be present on the electoral roll for voting.

People who live with their parents are more likely to have a lower credit score than others because they have not yet paid for utility bills, owned credit cards, or paid for contracts on a regular basis. Lower credit rating may have implications for the mortgage application, so it is always wise to build up a good credit history.

Only you correctly understand your situation, so you can pre-empt any possible obstacles that may hinder your application. Your mortgage adviser might not be able to find the best mortgage plan for you if you do not provide the pertinent information.

Problems seeking clarification often apply to the following scenarios:

Self-employed workers - are you able to provide two or three years of audited accounts?

Women on maternity leave - could you provide a letter detailing when you are returning?

Those undergoing a probationary status - could you secure an employer's reference?

When you have to meet one of mortgage advisers, be honest and helpful, and remember to bring all of the relevant documentation to support your claims. Examples of the typical type of documents are provided below.

- Provide a driving license or a passport to prove who you are.

- Present utility bills, such as electric and water bills, to show you reside where you say you do.

- Show them the proof of earnings on your most recent payslips and P60s.

- Provide evidence of your bank accounts by submitting your latest bank statements

- Validate the source of your deposit. Was it earned and stored in a savings account? If so, provide details of this account. If the deposit were a gift from another family member or friend, you would need to submit a letter of validation.

Given the number of mortgage deals available on the market, choosing the right deal can incredibly stressful and confusing. We are here to help you.

Initially, you need to decide how you want to repay your mortgage; either via a repayment or interest only loan.

The monthly repayments to a lender for a repayment deal comprise an agreed amount that includes both interest on the loan and a portion of the capital. At the end of the term (25-35 years), assuming you had paid all of the loan payments, you will own the property.

For interest only options, the monthly loan repayments only cover the interest charges. So at the end of the term, you will need to make credible arrangements for paying off the capital part of the loan; otherwise you will no longer own the property. To be approved for an interest-only mortgage you need to provide proof that you will able to repay the capital part of the loan.

Once we have decided which of these options is more suited to your needs, you will need to think about the type of mortgage deal you may be interested in. There are three main types: fixed rate, variable rate, and base rate tracker deals.
 
Fixed rate mortgages have a defined interest rate that will remain the same over a set period of time, whether the Bank of England (BoE) base rate rises or falls. These timeframe involved in the deal can be agreed for two, three, five or even ten years.

The main advantage is knowing exactly how much your monthly loan payments will be.

Variable rate mortgages are linked to the lender's basic lending rate, which generally follows fluctuations in the Bank of England Base Rate. It is also known as the standard variable rate (SVR) which varies between lenders. Borrowers are typically offered initial discounted offers, which expire after several years, and then the lending rate refers to the lender's SVR.

Base rate tracker mortgages are linked to the Bank of England's base rate. This means that mortgage rates can go up or down on a monthly basis. Currently in 2018, the base rate is relatively stable; however, nobody knows what will happen in the coming years.

So if the BoE base rate rises then your monthly repayments could increase. Conversely, if the base rate drops your monthly repayments may decrease.

So how much deposit do think you can afford?

Simplistically, the more you can put down as a deposit the less you'll to borrow. The size of the deposit will also have an impact on how much you can borrow and the interest rates on your homeowner loan.

Typically first-time buyer mortgages only require a deposit of 5% of the purchase price. For example, a deposit of £5,000 would be needed for a property valued at £100,000.

We can discuss this with you in our initial free consultation.

Other expenses you may want to consider

Buying your first home does not just involve securing a mortgage, as there are many other costs involved and you should budget for these accordingly.

These additional expenses include a property valuation fee, the arrangement fee for the mortgage, the solicitor's fee for sorting out the conveyancing, stamp duty (if the property is valued over £125,000) and Land Registry fees. Other legal costs could include local authority searches.

It always makes sense to know how much you can feasibly borrow before you go looking for first property purchase.

Nowadays, estate agents will often not let you view a property unless they are sure you can obtain a mortgage.

Luckily we can resolve this problem for you. Penda can provide you with a "decision in principle" (DIP).

The DIP provides the estate agents with proof of how you can afford to borrow and what type of mortgage deals you can apply for.

The "decision in principle" is based on your monthly income, your monthly outgoings, and your employment status.

For Penda to be able to make an assessment and provide you with a DIP, you will need to provide documents for proof of your identity, proof of residency and proof of your income.

While a DIP does not guarantee that your mortgage application will be successful, we will guide you through the process to ensure you succeed.

As a first time buyer, it is understandable that you may have heightened emotions and are inexperienced in this process. In the excitement, it's possible that you may forget check out a property properly and you may be worried that you missed something important.

We've all been there, so don't be afraid to request another viewing and perhaps consider taking a parent or colleague to assist you.

Some handy tips include the following:

Check the outside of property; are there any loose roof tiles, do the windows frames need replacing or are any cracks present in the brickwork?  Any of these issues could cost hundreds to thousands of pounds to remedy.

Once inside, remember to look for signs of damp on the walls and ceilings. Bear in mind that some may be obscured by furniture, wall-mounted pictures or recent decorating. Rust on radiators or pipework can also indicate the potential for damp.


The bathroom and kitchen are the most expensive rooms to refit, so if you dislike the current layouts, fixtures, and fittings, they will need to be replaced at some time. So remember to budget for the upgrades.
Everything else is generally cosmetic and relatively inexpensive in comparison.

Does the property have a drive, is it big enough for your car(s)?
Does it have a garage?
Can you park on the street? Is it congested? Do you need permits? Is it safe?
Can friends and family easily park their cars if they come to visit?
 
Older properties can be more expensive to keep warm if they have no cavity wall insulation or double glazing?
Remember to look at the Energy Performance Certificate from the seller which will provide you a good indication of what the energy bills will cost.

It's great to be outside in the sunshine. So if you are looking for a property with a garden, it's always beneficial if you can have one that's south-facing.

Hopefully, by now you have found your ideal property. Congratulations!

Now you need to make an offer and agree on the purchase price with the seller, via an estate agent.

To make the offer, you need the assistance of a mortgage adviser to negotiate prices and a solicitor on hand to get the offer accepted.

As you're a first-time buyer, you are generally in a better position than property owners looking to move house. They need to sell their property before they can move, whereas you are ready to go.

Now is the time to make your full application. Your mortgage adviser will arrange this with you.

Once we've received your mortgage application and any associated fees, we will run credit checks to ensure you can afford the loan, and you'll be asked for documents to support your application.

Your mortgage broker will highlight what documents are necessary for us to prove your identity, your current address and your income. Typically these will include driving licence and/or passport and payslips.

It's a good idea to bring these along to your appointment.

As part of your mortgage application, a survey needs to be undertaken on the property you want to buy. This ensures the value of the property is enough to cover the mortgage and there are no significant problems with the property.

There are three types of survey;



This is the most expensive and comprehensive. The condition of the property is thoroughly examined, and the resulting report will detail any defects or potential defects and how to remedy them. Such surveys are typically recommended for older or more unusual properties.

The survey cost will depend on the which type of assessment you select and the valuation of the property.

Our advisers will be able to advise you on the type of survey and the cost, which may even be included as part of the mortgage deal we recommend for you.

A mortgage lender has the right to reject a mortgage application, so it is essential that you ensure that the property valuation, together with your own financial information, is as accurate as possible. In such instances, any application or valuation fees will not be refunded.

Penda's local mortgage advisors are here to help. We do all the heavy lifting, guiding you through the process, taking care of all the paperwork and keep you up to date as proceedings progress.

Once the valuation has been undertaken, the mortgage provider is happy with the report, and your financial documentation has been received and validated the lender will make a mortgage offer.

The primary role of the solicitor is to legally transfer the ownership of a property from the seller to the buyer. Your solicitor will liaise with the seller's solicitor to ensure that the legal title of the property you wish to purchase is acceptable and that it can be legally transferred to you. This process is known as conveyancing.

The seller's solicitor will then prepare a legal agreement, or 'contract for sale', that will detail the price, the terms and the date when the property will legally become yours.

The contract is the legal agreement between you and the seller, which sets out the price, terms, and date on which the property will transfer into your ownership.

Unsure where to find a good solicitor for your conveyancing?

Don't worry, Penda works in partnership with two of the leading local conveyancing specialists in Newcastle. So you are good hands.

Once the mortgage lender has received your application, checked all of your financial documentation, and the valuation has been carried out, they should be in a position to finally provide you with a mortgage offer.

The offer will explain precisely how much they will lend you, over what duration and what the rate of interest will be.

A copy will be sent to your conveyancing solicitor who will explain the terms and conditions to ensure you fully understand and accept them.

Once you accept the terms of the mortgage offer, your solicitor will start the process of exchanging contracts with the seller.

By this time, you should be happy to proceed. And if you are, your solicitor will complete all of the remaining legal paperwork which will include ownership contract that you will need to sign.

This contract is legally binding, and if you pull out, you could lose your deposit. So, if you have any last minute concerns or doubts, you must raise this with your adviser and solicitor.

Once you have signed the contracts, you are committed to the process, and neither of you or the seller can pull out without incurring significant costs.