The do's and dont's of getting your finances ready

So you’re in the market for a new home and settled or at least looking at Shared Ownership. We want to make the process of buying a new home as easy and stress-free as possible to not only get your finances in order but also to get you the best possible offer you can afford.

What is a mortgage?

In short, a mortgage is quite simply a long-term loan on a property. The lender takes a legal charge on your property – i.e. they take it as “security” against the money they’ve lent you until it’s all repaid. That way the lender has something to sell in order to recover the money you owe if you get into difficulties, are unable to make your mortgage payments and the property is repossessed.

Getting yourself mortgage fit

Achieving your goals in any area of your life can sometimes require time, commitment, control and a certain amount of sacrifice. Owning your own home is no different, and given that it can take weeks, if not months, to correct something wrong or evidence good patterns of behaviour, it’s usually best to start as early as possible. Whilst nothing is guaranteed, here are a few ideas that will help you get your finances into shape before you apply for your mortgage:

The do’s

• Pay all of your financial commitments in full and on time as it shows lenders that you have a “good attitude” to existing debt – lenders like statistics and if you have paid your debts in the past you’re more likely to pay them in future, so they’ll be more receptive to giving you money.
• Register on the Voters Role – lenders like to know where you’ve been. If you’re not registered to vote at your current address, it can be an indication of “hidden” addresses where adverse credit is registered. Go to gov.uk/register-to-vote.
• Know what’s on your credit file and ensure that you close off any unused but still active credit by contacting the provider. Also, check that your address details are correct.
• Have some credit, however little - no active credit means that a lender can’t tell your attitude to debt – i.e. that you pay on time and in full. Improve your rating by using a credit card to pay for small items (e.g. petrol/groceries) and pay off the balance at the end of each month. If you don’t have a credit card then apply for one – your bank is most likely to approve you as you already have a history with them.
• Remove any financial associations with those who have poor credit – i.e. don’t share bank accounts or credit cards. Failure to do so could affect your ability to obtain credit in your own right.

The dont's

• Apply for new credit as this will limit the amount of mortgage you can get and could lower your credit score.
• Take Pay Day loans - they indicate that you can’t manage the money you’ve got coming in, so steer clear of them at all costs as their very presence on your credit file could cause your mortgage application to be declined.
• Withdraw cash on your credit card – not only is it an extremely expensive way of obtaining cash but it’s also noted on your credit file and at worst could make you look desperate.
• Use comparison websites for insurance quotations as they can result in multiple credit searches which may reduce your credit score.
• Have credit you don’t need, cancel credit cards with nil balances as lenders may take your “open” credit facilities into account when considering maximum lending.
• Enter into any new financial associations (bank accounts /credit cards) with anyone who has a poor credit history as this will affect yours.
• Max out your overdraft each month or even worse run up additional bank charges for going over the level you’ve agreed with your bank – it’s like a red rag to a bull when it comes to lenders who may take the view that you are already over-committed.

The above list is based on what we recommend, but please don’t think that you won't get approved for a mortgage if you have done any of the things on the ‘don’t’ list. It’s always worth speaking to a mortgage adviser who can chat with you and go through the mortgage process.

Top 5 advantages of using a mortgage adviser

One of the ways people get help when buying a new home is by using a Mortgage Adviser, who can provide advice and recommendations on choosing the right product. With around 80% of mortgages being secured after using such advice, what are the advantages of using a mortgage adviser?

1. You can save time

Researching the mortgage market and all the available deals can be very time consuming. If you have the time then that’s great, but there’s a chance that you won’t, plus you may miss something.

2. It could save you money

Using a mortgage broker could save you money. Not only are you getting an expert in the industry, but you’re also getting someone who will assess your requirements and look at the lender’s offerings. The chances are they will be connected within the industry and have access to products that aren’t available to the general public.

3. Mortgage Adviser services

As mentioned above, a Mortgage Adviser will have access to a large number of lenders and mortgages available. High street banks can only offer you the products they have available through their branches, and may withhold certain products for mortgage brokers. Many lenders aren’t available on the high street and only offer services to intermediaries such as Mortgage Advisers. Using a Mortgage Adviser will open up the market for your needs and requirements and enable them to find a product that’s right for you based on your circumstances and checks.

4. You’ll get expert advice

All Mortgage Adviser in the UK need to be certified, so you can be sure any legitimate professional you speak to will be suitably qualified. They also have a duty of care to you, meaning they have your interests at the forefront of what they do.

5. You’ll get help with the paperwork and application

When applying for a mortgage there is usually a lot of paperwork which can be overwhelming at the best of times. A Mortgage Adviser can help you with completing any paperwork and make sure you have all the information you need to complete it quickly.

As well as helping with the paperwork a Mortgage Adviser can also handle the application process and keep you informed of the progress with the lender every step of the way. This kind of support can be invaluable during a busy time in your life and will leave you free to focus on other details in your house-moving journey or life.

How much deposit will I need and what other costs are involved

 Many mortgage providers will ask for a 10% deposit on a home before they will consider lending you money. With Shared Ownership, the minimum you’ll need is 5% of the share you intend to buy. So for example a 50% share of a £200,000 home is £100,000. The minimum deposit you’ll need for this is £5,000.

Our Find a Home website breaks down the cost of a 40% share on a home and then rental on the remaining share – in this case 60%. So finding out roughly what your mortgage repayments could be is fairly simple by using our Mortgage Calculator.

To find a home, simply follow these instructions:

1. Visit findahome.bromford.co.uk
2. Select ‘New Shared Ownership Home’ from the drop-down
3. Type in the location you’d like to search for and press ‘search’

You’ll then be shown the homes and developments closest to the location you searched.

What other costs are there when buying a home?

When buying a home you’ll also need to make sure you have the money for additional costs on top of your deposit. These costs can vary depending on area and services you decide to use, but on average you’ll be looking at around £3,500 in other fees such as solicitor fees.

Buying a Shared Ownership home is the same as buying a home outright. Simply go online and search for homes in a particular area. The house listing will usually say if it’s Shared Ownership or not.

For an even easier way, you can search for a Bromford Shared Ownership home via our website by following the 3 simple steps below:

1. Visit findahome.bromford.co.uk
2. Select ‘New Shared Ownership Home’ from the drop-down
3. Type in the location you’d like to search for and press ‘search’

You’ll then be shown the homes and developments closest to the location you searched.

Once you’ve found your new home, click on the ‘Enquire now’ button to send a message to one of our friendly and knowledgeable Sales Consultants. Alternatively, you can give them a call on the number on the listing.

Our friendly Sales Consultant will be able to discuss any questions you have about the home and Bromford Shared Ownership.

If you haven’t done so already, now’s the time to get in touch with a Mortgage Adviser to gain a Mortgage in Principle.

If you haven’t done so already, now is the time to get all your relevant documents ready to hand over to your Mortgage Adviser.

So what documents do you need to help obtain a Decision in Principle?

1. Proof of identity such as a Passport or driving license
2. Proof of current address such as a bank statement or utility bill dated within the last 3 months
3. Last three months wage slips. If you’re self-employed you’ll need three years proof of accounts
4. Details of existing mortgage, loans or credit card commitments
5. Details of any arrears, defaults or CCJs (if applicable)
6. P60 if available.

It’s also handy to have a copy of your credit report to hand. This can easily be obtained online from Clear Score for free or other services.