First Time Buyer

When should a First Time Buyer come to see a mortgage broker? 

The best time to reach out to a mortgage broker is in that period where you move from Rightmove or online viewing into phoning up or clicking a button to make an appointment to view. 

We often come across people who have put offers in on properties without getting that Agreement in Principle in place. Even if it only takes a few hours to get that Agreement ready, sometimes that can be the difference between getting the property and missing out. So definitely talk to us before you start viewing.

How do I know what my credit score is and how do I improve it?

Credit scores consist of a three digit number and people often think that you just need to get to 999 or 998 and that’s the end of the story. But a credit file actually shows a footprint of your conduct over quite a number of years, so it’s not just the number that we’re looking at. 

We’ve seen very straightforward deals go through with quite a low credit score but good conduct – and vice versa. A broker’s job is to match your credit profile to the way a lender will view that credit file. Not all lenders, for example, will take notice of the score. Some are far more lenient on conduct or level of indebtedness than others. So if we’ve got clients with a slightly challenged credit score, we would ask to look at the details because that will dictate where we go for the lending. This is one area where our experience can be invaluable.

Some lenders actually have a computer-led algorithm where there’s not much room around the decision. Other lenders will actually have an individual underwriter look at the overall case, where a more human approach can be taken. 

Typical issues tend to be around things like mobile phone companies where people have missed the end of contracts – we see quite a lot of this. People worry unnecessarily about that because many lenders will ignore credit issues with phone companies. If your credit file looks slightly complicated, we can navigate that for a client.

What help or schemes are available for First Time Buyers?

One of the most common questions we come across is whether you can get a guarantor for your mortgage. People think that because mum and dad have a property it can be offered as security. That’s not the case, but a good solution is something called Joint Borrower Sole Proprietor. It makes the mortgage like a joint account, with the applicant plus mum, dad, brother, sister etc., but the only person on the property deeds is the applicant. 

A typical scenario is that mum and dad are going to boost the income on the application. They are party to the mortgage and the mortgage liability. If you weren’t earning quite enough to borrow what you need for a property, but one of your parents is able to jump onto the application with you, we add their income and use the total as the basis to work out the maximum loan. So that’s Joint Borrower Sole Proprietor.

What sort of fees are involved when buying a house?

It’s very important to be aware of the fees because they’re not insignificant. We’re recording this in Spring 2023 and we’ve just had some changes to stamp duty levels. Stamp duty tends to be the biggest cost for people buying properties, but there is a level below which stamp duty is not payable for First Time Buyers. This is more generous in London than elsewhere. But beyond that stamp duty is payable to the inland revenue on all purchases.

The other fees and charges that you’ll incur are from your conveyancing solicitor who will typically charge around £1,200 to do the legal work to process your mortgage and register it on behalf of the lender, with the Land Registry. 

A lot of brokers charge brokerage fees. Mortgage Marketplace charges fees, and these are more favourable for First Time Buyers. Go to our website or talk to us to determine what those fees are for you.

The lender will also charge fees – including a valuation fee for someone to visit the property to check it over and make sure it’s appropriate mortgage security. If you have a fixed rate product or a discounted tracker product, often the lender will charge for that product. 

We will talk with you about whether you will pay that fee upfront at mortgage completion or add that fee to the loan. There’s an option to do either. We tend to advise people to pay the fee rather than adding it to the loan because it will be part of the loan forever, accruing interest.

Can you help First Time Buyers with other services, such as mortgage protection?

A number of things go along with the mortgage. Typically a First Time Buyer will not have used a conveyancing solicitor before so we can provide details of relevant solicitors that can help. We will obtain a quotation where we’ve done due diligence and we understand the service levels and work volumes, so that we know they can actually do the work in reasonable time. 

The conveyancing industry struggled a bit in terms of capacity during and since Covid, which can be a source of frustration for applicants. We don’t insist that you use our partner solicitors, but we’ll offer guidance. 

We do look at protection products – typically life assurance and critical illness cover, plus income protection. These are additional financial products to support the mortgage recommendation, subject to people’s circumstances. Some are relevant, some are not and we would give advice in that area.

Other things we typically look at are buildings and contents insurance. If you are buying a property for the first time, you might not have come across the requirement for buildings insurance, which a lender will want. Equally, your contents can add up to quite an amount of money so it’s always a good idea to insure those things. We’re there to help with that too.

What else should First Time Buyers consider? 

The typical First Time Buyer is sometimes a bit unsure as to how to approach the whole transaction – or even how to approach a mortgage broker. There’s a lot of jargon in our industry and this can be quite daunting. 

We’re very used to helping First Time Buyers. There’s no such thing as a silly question – all your queries are relevant because this is a journey you’re taking for the very first time. We’ve got a lot of experience and I would encourage First Time Buyers to pick up the telephone at your earliest opportunity. 

We’re happy to help. It’s really quite a simple journey once you get your head around some of the jargon. We’re also there to ‘put out fires’ – sometimes estate agents can get quite impatient as they get paid when the deal goes through. We can take some of the heat out of that scenario by making the communication clear. 

If something doesn’t go quite so smoothly with the solicitor or mortgage company we keep you informed about timescales and reassure you that the deal is going to go ahead and everything’s fine. 

Your home may be repossessed if you do not keep up with your mortgage repayments.