Securing a mortgage

When it comes to buying a new home, finding out how much you can borrow is essential. Your mortgage repayments will also be the biggest ongoing monthly expenditure once you own the property.

Here are some key things to think about:

• Raising a deposit can be difficult when you’re a first-time buyer, especially if you’re also spending money on rent. So, being disciplined is important. Setting yourself a budget is a good way to focus your spending and reach your target.
• How much will you need? The deposit you require can vary according to the lender, however as a minimum, you’re likely to need 10% of the value of the property. The bigger the deposit you have, the stronger position you are in. 
• Aside from savings, the ‘Bank of Mum and Dad’ or your grandparents can help you in a number of ways. For example, they can gift the money to you, or act as a guarantor for the mortgage. If someone is helping you, they should ensure they investigate the implications on their own financial security first.
• Before you start looking for a property, get your mortgage in place. You will benefit from
      o    Being able to move quickly when you find the property you want. 
      o    Being in a stronger negotiating position when putting in an offer on a property.

• Your credit rating helps a lender to assess whether to lend you money and how much. If you’re worried about your credit score, you can find out what it is ahead of time and, with enough warning, you could work to improve it. Take a look at The Money Advice Service for detailed advice on how to get your credit rating into shape. Things that can have a negative impact on your credit rating include high levels of debt, missing and late payments or even unused credit cards. There are two main credit agencies that you can check your credit score with:
      o    Experian
      o    Equifax
  
  
• Experian and Equifax offer free 30-day trials.
• Shopping around for a mortgage can mean you find a better deal. Although, as you already have a relationship with your current bank or building society, you could check with them in the first instance.
• Wondering how much you could borrow? Use our mortgage calculator to find out.
• You should assess the impact of the monthly repayments carefully. Think about what you may have to sacrifice in order to meet the repayments and consider your future plans. If you are planning to do some travelling, for example, you need to be able to meet your monthly repayments.

For some free mortgage advice, get in touch with L&C, our mortgage partner, for free mortgage advice by calling 0800 0731945.