Buying your first property can be exciting but it can also carry some uncertainty. For some it can even be daunting as the new financial responsibility can be overwhelming. A mortgage itself can be complicated, especially with so many products to choose from. That said, buying your own home has many advantages. You can decorate the property to your taste and a mortgage allows you to essentially spread the cost of the home over a long period of time.
This article will look at 3 simple steps into making your first mortgage easier to digest and has been prepared by Martin Alexander at Expert Mortgage Advisor.
- Speak to a mortgage broker
The first thing you’d want to do is to speak to a mortgage broker. An experienced mortgage broker can be invaluable, even for seasoned investors who have purchased numerous properties. The reason a mortgage broker can be so valuable to a first time buyer is simply because of the amount of experience they bring to securing you the right mortgage.
It wouldn’t be advised to simply walk into a bank and pick the mortgage that was presented to you. A mortgage broker would first establish all of your circumstances and then look at the most suitable products for you. This would be based on your income and what you’re likely to be able to afford over the term of the mortgage. A mortgage broker would also look to secure you a mortgage that would cost you the least amount of money for the duration of the mortgage.
Mortgages are all very different, some have valuation fees and some have arrangement fees for example. Certain mortgages are presented in a way which may appear cheap, but in finer detail can be quite expensive once all the details are examined. Mortgage brokers will identify fees and the effect they’ll have on your mortgage.
Furthermore, a broker can guide you throughout the entire process, by talking to your estate agent and communicating with your solicitors throughout the buying process.
- Get a decision in principle
Getting a decision in principle is key before you start your property search. Once a broker has established the maximum amount you can borrow, they can then provide you with a decision in principle. This is often called a DIP or an AIP (agreement in principle).
It’s important to get a DIP before you begin your property search, simply because you’ll have a budget to aim for. It doesn’t really make sense to begin your property search before you know how much you can borrow. In addition, if you do view a property that you want to make an offer for, your estate agent will more than likely ask you for your DIP document. If you don’t have this, you may lose the property to another buyer who already has this in place. A DIP shows estate agents that you have a mortgage agreement in principle and would be a safer bet than another buyer who doesn’t yet have a DIP.
- Begin your property search
Once you have the above in order, the fun can begin. Start your property search and remember to stay within your budget. Once you’ve viewed a number of properties you’ll start to get a feel of what you really want. Once you do find a property that suits your budget then make an offer for the property. Have your decision in principle ready so that you can email it to your agent as soon as possible. This will give the agent confidence that your offer is serious and that you can arrange a mortgage to purchase the property.
If your offer is accepted, then inform your broker immediately. Your broker will then arrange for a mortgage survey to be carried out.
Lenders will usually arrange their own mortgage survey where they’ll send a surveyor to the property to ensure that the property is eligible for their funds. Lenders of course want to protect their funds and won’t just lend to borrowers without investigating the property first.
Once a survey has been carried out, a mortgage offer will soon follow (usually around a week at the most). Once you have your mortgage offer, it’s simply left to your solicitors to finalise the legal side of the purchase. Solicitors will usually take around 6-8 weeks to carry out the conveyancing, however it can take up to 3 months and even longer in some circumstances (although rare).
As soon as the solicitors near the of the process, you’ll be asked to come in and sign the final documents. This will be followed by an exchange of contracts and then completion. This post was written by expert mortgage advisor who frequently write about bad credit mortgages.