Buying your first home is exciting, but it can also feel overwhelming. Between working out your budget, viewing properties and comparing mortgage options, there is a lot to consider.
Mortgage and Protection Adviser
Home Partnership
Here are some of the most common mistakes I see first-time buyers make and how you can avoid them.
1. Relying solely on an online mortgage calculator.
Online calculators can provide a useful starting point, but they don’t give the full picture.
Mortgage affordability can be affected by your income, credit commitments, childcare costs, employment history, deposit and the lender’s individual criteria. Two lenders can assess the same application very differently.
Before arranging viewings or making an offer, speak with a mortgage adviser who can assess your circumstances properly.
2. Looking at properties before confirming your budget.
It is easy to start browsing properties in Chelmsford and across Essex before knowing what you can realistically borrow. However, this can result in you falling in love with a property that is outside your budget.
Obtaining an Agreement in Principle can give you a clearer indication of your potential borrowing and show estate agents that you are in a position to proceed.
An Agreement in Principle is not a guaranteed mortgage offer, as the lender will still need to complete its full assessment.
3. Using every penny for the deposit.
Your deposit is only one of the costs involved in buying a home. You may also need to budget for:
- Solicitor and conveyancing fees
- Survey or valuation costs
- Mortgage product and application fees
- Buildings insurance
- Moving expenses
- Initial repairs, furniture and decorating
- Stamp duty, where applicable
Keeping some money aside can help you deal with unexpected costs without relying on credit shortly before completion.
4. Changing your finances during the application.
Avoid taking out new credit, increasing credit-card balances, financing a car or making large unexplained transactions while your mortgage is being arranged.
A lender may complete further credit checks before issuing the offer or releasing the mortgage funds. A significant change could affect affordability or delay the application.
If you are considering any major financial change, speak with your mortgage adviser first.
5. Not checking where the deposit is coming from.
Lenders and solicitors must verify the source of your deposit.
If any of it is being gifted by a family member, the lender may require a gifted-deposit declaration confirming the relationship, amount and that the money is a genuine gift rather than a loan. Bank statements and identification may also be requested from the person providing the gift.
Tell your adviser about a gifted deposit from the beginning so the correct lender and application route can be selected.
6. Assuming every lender will accept every property.
The property itself is an important part of the lender’s decision.
Leasehold flats, shared ownership properties, ex-council homes, non-standard construction, properties above commercial premises and some new-build developments can be treated differently by different lenders. Issues such as the remaining lease term, service charges, ground rent, estate charges where applicable, construction type and building height may need to be considered.
This does not necessarily mean the property is un-mortgageable, but it is important to check the details before committing yourself financially.
7. Choosing a mortgage based only on the lowest rate.
The lowest advertised interest rate is not always the most suitable or cheapest overall option.
You also need to consider:
- Product fees
- Valuation fees
- Cashback
- Early repayment charges
- The initial product period
- Whether the fee is being paid upfront or added to the mortgage
- The total cost over the period you expect to keep the product
A slightly higher rate with a lower fee can sometimes work out cheaper, particularly on a smaller mortgage.
8. Instructing a solicitor without checking the lender’s panel.
Not every solicitor is approved to act for every mortgage lender. If your chosen solicitor is not on the lender’s panel, you may face additional costs or need to appoint another firm.
Before formally instructing a solicitor, check that they can act for your likely lender and have experience dealing with your type of purchase.
9. Making an offer without understanding the next steps.
Having an offer accepted is an important milestone, but it does not mean the property is legally yours.
The mortgage application, valuation, legal work and searches still need to be completed. Until contracts are exchanged, either party can usually withdraw from the transaction.
Responding quickly to requests from your adviser, lender and solicitor can help keep the purchase moving.
Start with proper advice.
The best time to discuss your mortgage is before you begin seriously viewing properties.
A mortgage adviser can help you understand your budget, compare suitable lenders, identify potential issues and prepare the documents required for an application. This can put you in a stronger position when you find the right home.
If you are considering buying your first property in Chelmsford or elsewhere in Essex, please get in touch and I’ll be happy to talk through your options.
Please call Petar on 01245 253 370 for any mortgage advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The information provided is for general guidance only and does not constitute personalised mortgage advice. Mortgage availability and lending criteria are subject to individual circumstances and lender assessment.
