Everything you need to know when securing your mortgage
Q&A with Bianca Dhillon, Senior Relationships Manager at First Mortgage.
When it comes to buying a home, understanding how mortgage deposits and interest rates work can be tricky and getting independent financial and legal advice is vital. However, it can be quite simple when you have the support of an independent mortgage broker who can explain which options are best for you.
We spoke to Bianca Dhillon, Senior Relationships Manager at First Mortgage on what you need to know when buying a new home. We discussed everything from credit ratings to schemes which help new buyers purchase their perfect home. Read our Q&A to have all your buying queries answered.
Q. What is the first step when considering buying a home?
Get yourself ‘ready to buy’ so you know what you can borrow versus what you want to borrow. Firstly, figure out your maximum buying power and what costs need to be taken into account – that means both the purchase cost and your monthly outgoings. A mortgage broker can help you find those answers and will ensure you get the best advice and the right mortgage for you based on your circumstances. They can help you make savings, whether that be fees from lenders or savings on monthly payments, all of which are better in your pocket. Once you have your figures worked out your mortgage broker will give you assurance with an ‘Agreement in Principle’ giving you the confidence to view homes within your price range.
Q. How much deposit will I need to put down?
You need as little as a 5% deposit to buy a home – that’s the minimum you can put down for most mortgages. At present, whether you put down a 5% or 10% deposit on your new home, interest rates will remain the same. Some buyers decide to put down 5% and use the rest of their savings for home furnishings whereas others prefer to put a higher deposit down to save on their monthly payments. Today, there are three lenders offering mortgages with 5% deposit - Halifax, Skipton and Hanley.
Q. Is there a benefit of buying a new build home over a pre-owned home?
Every buyer has different reasons for choosing a particular home type, but there are plenty of benefits when it comes to a new build. As a blank canvas, you get to put your own stamp on your home. New build properties are also very energy efficient and therefore attractive to buyers given the savings they can make on their energy bills, not to mention the low maintenance costs involved. Last and certainly not least is the fact that many lenders are now offering Green Mortgages, which often offer a lower interest rate and sometimes cashback as they want to attract buyers that are ultimately reducing carbon emissions.
Q. Do I need a perfect credit rating to obtain a mortgage?
You don’t need a perfect credit rating to obtain a mortgage and there are so many specialist lenders that have come to the market over the last couple of years who can help those in that position. This is where your broker can really make a difference by placing your mortgage with the right lender for your situation.
Q. I’m nervous about costs and if I can sustain them, given I don’t know how the next 12 months or so will go with my bills?
That’s where you need to speak to a broker. They will help you explore what options are available for you with costs now and during your mortgage and help you become fully informed. This in turn may give you peace of mind that your move can be achievable. They can also help guide you with timings and how long the process might take.
Q. I don’t know whether I want to fix my rates or go for one that reduces as I think rates may keep coming down?
Another reason to speak to your broker and get the very best advice. Nobody can predict the markets and our best piece of advice is to explore this with your broker and they can help you understand which route is best for you.
Q. Are there any schemes or government support out there that can help me?
The Deposit Unlock is a cost-friendly low deposit mortgage assistance scheme, created by mortgage lenders and the housebuilding industry to assist buyers looking for their new home. The Deposit Unlock scheme is exclusive to new build homes and allows buyers access to competitively priced mortgages on a 5% deposit. There is also a scheme called Joint Borrower Sole Proprietor – which can often be a solution when buyers want to buy a home that’s just out of their reach based on their incomes. This scheme can allow other family members and sometimes friends to be added to the mortgage to support the affordability gap without them being liable for second home dwelling tax.
Q. Is it more difficult to get a mortgage on a new build home?
No, not at all but it’s best to speak to a broker who specialises in them. The criteria for a new build home compared to a pre-owned home are often different, so it’s important to ensure you get the right advice before you reserve or make an offer on a home to avoid any disappointment.
Check out First Mortgage on Facebook, Twitter and LinkedIn for more advice on making the most of your mortgage. To get an initial idea of what your monthly mortgage repayment might be on a new home, use our new build home mortgage calculator.