Here are four top tips for first-time buyers

 

Article written by Holly Mead from The Sun

RISING property prices are making it harder than ever for first-time buyers to get at foot on the ladder.

But mortgage broker Carmen Green has these tips for aspiring homeowners. 

Carmen, 26, is a mortgage adviser at Surrey-based mortgage brokerage Xpress mortgages. 

She started working at the brokerage at age 18, “when I had no idea what a mortgage even was”, but soon trained up and qualified for her current role. 

Carmen says the most common worry that first-time buyers have is around their spending. 

She said: “The question I get asked most is ‘do I need to stop spending money so my bank statements look healthy?’”

“I advise clients to go through their bank statements and consider if they were the one about to lend hundreds of thousands of pounds out.

“What might raise concerns to you? Is the person gambling, in an overdraft regularly, or spending every penny each month with no buffer?” 

“It’s a window into someone’s spending habits.

But that doesn’t mean buyers have to curb all of their spending to get a mortgage, Carmen adds. 

Instead, she says it’s important to show you are in control of your finances and not living beyond your means. 

So there’s no need to panic because you have a holiday book or splurged for a big birthday treat, as it’s about the overall picture not just one purchase. 

As well as the common questions such as this, Carmen gets some more unusual ones too. 

She adds: “I recently had a client send me a photo of a pile of euros under their bed and ask if that was suitable proof of deposit.

“It turns out there was a very valid reason they had that stash of cash but it wasn’t easy getting it through the money laundering and compliance checks!”

Another client was reluctant to hand over their bank statements.

“Without going into detail, I would say be mindful of what you name money transfers to your friends – as not all mortgage underwriters will share your sense of humour,” said Carmen. 

So with that in mind, here are her four top tips for first-time buyers: 

Set a budget

Setting a budget is one of the first things any aspiring homebuyer needs to do -this couple set a £50 a week rule.

And it’s not just about working out what property price you can afford.

Remember to factor in all the extras such as solicitor fees, stamp duty, moving costs and even the cost of furnishing your home. 

Carmen said: “Once you have worked out the costs of buying, you can calculate how much deposit you can put down and how much you can afford on the monthly mortgage repayments.” 

And don’t forget to factor in any potential changes in your circumstances: are you expecting to change job, have a baby, or see an increase in travel costs, for example? 

These will all affect what you can afford to repay each month – and how much you can borrow. 

Check your credit file 

Your credit score is one of the things any lender will look at before deciding whether to give you a mortgage or not.

That means you need to make sure it’s in as good a shape as possible. 

Any bad credit registered against you such as missed or late payments, defaults, or County Court Judgements, will be flagged to a lender. 

You can do a free “soft check” or your credit file through credit agencies such as Experian and Equifax.

This will help you understand how good your credit profile is, and also let you spot if there are any mistakes on it. 

A mortgage adviser can help you go through the file if you’re not sure what to look for, as well as giving you tips on how to improve it. 

“It’s not uncommon for an incorrect missed or late payment to be on your file causing a negative impact, so spotting this means you can get it removed before you apply for a mortgage.”

Sort your documents

Buying a property means a LOT of admin, so it makes sense to get all your paperwork up to date and in place. 

You’ll need all ID documents such as a driving licence or passport, payslips, a p60, bank statements and any recent accounts if you’re self-employed.

Make sure everything is registered to the correct address and that any ID is still valid. 

Having all this to hand before you start the process can make it a lot less stressful. 

“As a mortgage broker, it also means I can do my research and give advice more accurately too,” said Carmen. 

Choose your location

The saying “location, location, location” exists for a reason – choosing where to live is important. 

Once you settle on an area in which to conduct your property search, you’ll have to do some research into property prices there and see what you can afford. 

Carmen said: “It might be that you can’t afford the four-bed house you saw on Zoopla and fell in love with. 

“Ask yourself, would you prefer to look in a different location to buy a similar-sized house, or stick to the same area and get something slightly smaller?” 

Thinking about how long you plan to stay in a property or whether you’ll need more space in the future, for example, are also important to consider. 

There are some buying schemes that could help you afford a home in your top area, such as Shared Ownership Schemes, so these may also be worth investigating. 

Plenty of our My First Home first-time buyers have used these schemes to get on the ladder.

Carmen said: “Being able to share the excitement a client feels at buying their first home or a new home is the best thing about my job – it never gets old.

“And if I can save clients thousands of pounds by getting them a good mortgage deal or remortgaging them, that feels good too as so many people often don’t realise how much they can save.”

01932 350 641
info@xpressmortgages.co.uk
www.xpressmortgages.co.uk

Six common mistakes that could delay your application or even get it rejected

 

Article written by Holly Mead from The Sun

THERE’S an awful lot to think about when you’re buying a home – but making a mistake could delay your mortgage application or even see it refused.

Common errors could easily knock your homeownership plans off track.

It’s easy to make mistakes when you’re rushing to secure an offer on the house of your dreams.

But as house prices soar, some mortgage providers are getting stricter on who they will lend to – so it’s best to avoid any mistakes if you can.

Rachel Lummis, mortgage advisor at Xpress Mortgages, said there are plenty of things you might not realise can trip you up when applying for a mortgage.

“If you’re making a big lifestyle change, you’ve missed payments on a loan or credit card, or you’ve been applying for credit just before the mortgage process – even taking out a new mobile phone or credit card.

“All these things could mean your application is delayed or stop the provider from wanting to lend to you at all.”

She told The Sun the most common mistakes that buyers make – and some of them could mean your mortgage application gets refused.

Not preparing properly

Rachel said: “Before even looking at a property, you need to be mortgage ready and get your paperwork in order.

“This is the biggest cause of delays.”

Spend some time getting all your paperwork together: you’ll need at least three months of payslips, bank statements and household bills to prove your income, outgoings and address.

Rachel said: “Some lenders prefer you to have been employed for three or six months before they will approve you.”

Watch out for joke entries on bank statements – if a friend has transferred you cash with a comedic reference, it could stop a lender approving your application.

If you’re self-employed, you’ll need your accounts and tax return.

Not being registered to vote

Being on the electoral roll is important but often overlooked.

Registering to vote gives lenders proof of your address and how long you have lived at a property.

Rachel said: “Even if you are renting and don’t think you’ll be at a property long, you should always register to vote.

“Some lenders won’t accept you if you aren’t on the electoral roll.”

Registering is simple – just contact your local council.

Not checking your credit file

Check your credit score and particularly look out for any marks that might impact your ability to borrow.

All three of the main credit reference agencies – Equifax, Experian, and TransUnion – let you view your credit score for free. Although if you want to monitor it regularly, you’ll have to pay.

The better the score, the more chance you’ve got of being granted a mortgage.

You can build your score by using credit responsibly – that is to say, paying off your credit card in full each month and not maxing out your credit limit.

Rachel said: “If you have a poor credit history, don’t despair – there are still providers which will lend to you.”

Watch out for applying for credit in the run-up to your mortgage application too – providers want to see consistency and stability, and taking on extra debt could be a cause for concern.

Not having up-to-date ID

Checking your identification is in date and correct is crucial.

If you’ve changed your name, perhaps because you recently got married, your mortgage application will need to be in the same name as your ID documents.

Got a middle name? Make sure it appears on your passport and any other form of ID you’re submitting as proof of identity.

Rachel said: “If your driving licence has an old address on it, it won’t be valid.

“Recently married? Congratulations – but you won’t be able to use your new name unless you’ve updated your ID. Have your marriage certificate to hand too.”

Other lifestyle changes could impact your application too – for example if you’re buying a property in Scotland but your job is based in London, a lender might think this is a red flag.

Not providing proof of deposit

Before granting you a mortgage, a lender will want to know where your deposit is coming from.

This is because of money laundering rules – the provider needs to know that your cash is coming from a legit source.

If it’s from savings you’ve built up over time, you’ll need to show the evidence – whether that’s from bank statements, a Premium Bond statement or your Isa account.

Rachel said: “If the deposit is a gift from relatives, you’ll need a gifted deposit letter, stating that this is the case.”

If the money is from an inheritance, you should have a letter from the executor of the will and a statement showing the money being paid in to your bank account.

Not telling the truth

There’s a time and a place for bending the truth, and your mortgage application is NOT it.

“Always be upfront and honest,” said Rachel. “Lenders use underwriters to assess every mortgage application and they go through everything with a fine tooth comb.”

If you have any bad debt, it’s best to disclose it upfront rather than wait for the lender to find it.

Don’t exaggerate your income or play down your outgoings either – a lender needs to assess whether you can comfortably afford the debt you want to take on.

Meanwhile, a new mortgage lender is set to offer buyers fixed-rates of up to 50 years.

And homeowners can use a free calculator to find out if it’s worth remortgaging.

01932 350 641
info@xpressmortgages.co.uk
www.xpressmortgages.co.uk

Self-employed should submit tax returns early

 

Changes for self-employed applicants

Self-employed mortgage applicants face a tougher process in applying for a mortgage than their employed counterparts as lenders seek extra assurance of stable income, both in the past and going forward.

Not only have many faced tough and unexpected implications for having made use of self-employed government grants implemented to help them through the Covid-19 pandemic, but generally, the roughly 15% of our society who brave going at it alone are arguably more hindered than rewarded in the mortgage world.

Now, as always at this time of year, the process for self-employed becomes even more demanding as many lenders require tax returns to be submitted ahead of time in order to avoid assessing mortgage affordability with figures that are more than 18 months old. As such, those wanting to use their year-end tax figures from 2019-20 must have their mortgage application submitted before October.

For those who have submitted their tax return ahead of the HMRC’s January 31 2022 deadline for this current tax year, this is somewhat of a nonissue. However, for the many who would typically use the full allotted timeframe to submit their tax return, this can be a surprising and unwelcome finding.

Importantly, it should be noted that lenders do not expect the outstanding tax to be paid early, only that the applicant has submitted their tax return. For more information about self-assessment tax returns, please refer to the government website:

Self Assessment tax returns: Deadlines – GOV.UK (www.gov.uk)

Help is at hand

Nevertheless, even if the process for self-employed does have a few more obstacles along the way, here at Xpress Mortgages we help self-employed on a daily basis make their mortgage dream a reality.

Although the majority of lenders do follow this, there are a select few who don’t, while some can use the trading year for Ltd companies – in this case, you are going to need to speak to a mortgage adviser.

Our expert advisers also know the criteria of the lenders meaning they can package your mortgage application in the best way possible, giving it the best chance of being accepted first time.

We have access to the entire market along with an understanding of which lenders would best suit your situation.

If you are self-employed and looking to apply for a mortgage in the near future, get in touch with our friendly team today and we will help you through every step of the process.

01932 350 641
info@xpressmortgages.co.uk
www.xpressmortgages.co.uk