I've saved my deposit, but what's next?
If you’re in the process of saving up a deposit to buy your first property and making the exciting leap onto the property ladder, you’ll likely have lots of questions you need answered. We look at some of the key things you should know about buying a home.
Who should be my first point of contact when looking to buy my first house?
Firstly, your mortgage adviser will be able to advise on how much you can expect to borrow and how much of a deposit you’ll need. Next, you’ll need to speak to your solicitor who can provide you with guidance on the current market, assess what you can afford to offer, submit notes of interest, offer on your behalf and guide you through all the legal elements to completion.
What happens when I am ready to make an offer on a property?
Notify your solicitor as soon as possible and they will be able to submit a note of interest on your behalf so you will be kept up to date if a closing date is set. Your solicitor will be able to find out if the property you’re after has attracted any other interest and they can advise you to submit an offer for immediate acceptance.
What does “conclusion of missives mean”?
Missives are the legal documents which are signed by both the buyer and the seller to conclude the sale. Once signed, the seller is legally obliged to sell the property and the buyer must pay the agreed sum on the agreed date. You’ll be asked to submit your deposit or additional funds to a specific bank account ahead of the entry date. Your solicitor will then contact your mortgage adviser to request the mortgage funds.
How long does it take to obtain a mortgage?
You should get a mortgage offer first also known as 'offers of advance' which is a formal document issued by a mortgage lender to a borrower that agrees to lend money for the house purchase. This process can take a few weeks to be approved so it is best to allow six to eight weeks' time from offer acceptance to move in date.
What is the minimum deposit required to be successful in gaining your first mortgage?
This varies depending on the lender and mortgage type, but at present 15% is usually the minimum.
What are the various schemes available to help first time buyers to get on the property ladder?
The First Home Fund loans first time buyers up to £25,000 to top up their house deposit. This is invested as an equity loan in the property.
The Help to Buy (Scotland) Equity Loan Scheme for new build homes which can help you move with just a 5% deposit and an equity stake from the Scottish Government of up to 15% loan from April 2016 is restricted to a maximum purchase of £200,000. Speak with a local developer to find out more.
LIFT is another shared equity scheme which is available on properties on the open market. The LIFT Open Market Shared Equity scheme allows people on low moderate incomes to buy homes that are for sale on the open market. Buyers purchase an equity stake in the property of 60% to 90% and a modest deposit is normally required. Find out more on the LIFT scheme.
What fees are there associated with getting a mortgage?
There can sometimes be an arrangement fee with different mortgage products which can be up to £2,000. You can often choose whether to pay the arrangement fee upfront or add it to your monthly repayments, however it’s worth noting that choosing the latter option means that you will pay interest on the fee. There may also be a fee if you use a financial adviser. A CHAPS fee is also required to be paid and includes the lender’s costs for sending the mortgage funds to your solicitor to allow them to pay for the property on your behalf. You will also have to pay the conveyancing fees to the solicitor for looking after the property purchase.
Is there an option to increase mortgage payments should my financial circumstances change in the future?
Most mortgages offer a 10% overpayment facility on your current monthly repayments. If you exceed this amount, there is often a charge, known as an early repayment charge. The advantage of overpaying is that you will be able to pay off your mortgage balance more quickly.
What happens to my mortgage if I decide to sell up and buy a new home?
Most mortgages are portable, meaning they can be transferred from the property which you originally borrowed against to the home you want to move to, so moving house is not a problem. However lenders will want to value the property and there may be a fee to pay for the transfer, typically a few hundred pounds. One of the advantages of moving home is that it provides an opportunity to look for a better mortgage deal. Speak to your adviser about any deals they may have for you keeping your mortgage with them, but be aware that loyalty does not always pay off. Your mortgage adviser will be able to tell you whether it is better for you to pay up any early redemption penalties and move lenders or to stay put until any fixed rate periods are finished.
As independent mortgage advisers, ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. Give us a call on 0131 253 2920 for more advice.
The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.
The inital consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.
ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.