Mortgages

A person who has not acquired a freehold or leasehold interest in residential property in the UK or an equivalent interest elsewhere in the world is generally classed as First time buyer. However, there are few lenders who will class you as a first time buyer if you had a property in the past and have sold it before 12 months.

Buying a house is often complex and confusing, no matter how many times you’ve been through the process, but for a first-time buyer, it can be an even more daunting experience. We understand how stressful it can be. Our advisers can guide you through the entire process, in an easy to understand way, we are here to help you!

If you’ve decided you’d like to own your own home, there are a few things you need to understand to make the process easier. From saving for a deposit to the mortgage application process, here’s everything you need to understand:

• Review your financial circumstances and seek advice on how much deposit you need to buy a house
• Find the correct type of mortgage interest rate (e.g. fixed or variable) and select affordable schemes to get on the property ladder
• Select correct type of repayment method (interest only or repayment)
• Find a right property (freehold or leasehold)
• Make sure you can afford monthly repayments
• Budget for the other costs of buying a home. Don’t forget the associated fees (Solicitor fees, valuation fees, mortgage fees, arrangement fees, stamp duty fees, etc)

Most people need to borrow money to buy a new home. A person selling one property and purchasing another property will require a Homemover mortgage. Many home owners looking to move will face difficulties securing a new home mover mortgage, even from their current lender.

Many mortgages are 'portable' which means you may be able to transfer your current mortgage product to a new property. Porting is a great flexible feature but there are no guarantees that your lender will permit you to do it, for two key reasons:

1. You have to re-apply so may not qualify.

When you ask your lender to 'port' your mortgage, you effectively have to re-apply for that deal, so you may not qualify as it is much tougher to get a mortgage now than it used to be.

For example, your circumstances have changed, you're now self-employed, you earn less or you have more debt and/or outgoings. Or you might not have changed at all but your lender's criteria has, so even though you got your first mortgage without hassle, it doesn't mean the same will happen again.

And if you haven't made all your mortgage payments on time, chances are the lender will refuse in the hope you leave them.

2. You may not be able to borrow more.

If you move to a more expensive property, you may need to borrow more cash but your lender may not allow this if you are already close to the maximum it will lend you. Even if it will lend you the extra money, it may insist you put the additional borrowing on a different product.

Additionally many mortgages were arranged on an ‘interest only’ basis meaning the debts have not reduced. Add to this the fact that lenders gave mortgages to many who could barely afford them. Lending criteria has tightened up for home mover mortgages – a lot. Lenders want to avoid what they see as ‘risky’ mortgage lending and have taken steps to avoid taking on such business.

These are some of the problems restrictive lending policies causes those wishing to move:

• Lending risk (the risk being that of a lender possibly losing money) is reduced if the borrower can put down a large deposit. This is not easy, especially for those who borrowed a high proportion of their current home, and prices have fallen since meaning there is not much equity left in the property.
• The Financial Conduct Authority (FCA), who regulates the market, insists lenders are more prudent in the amounts they lend. So they now lend less than they used to for any given incomes.
• The FCA has also restricted lending on an interest only basis, whereby no capital is payable off the loan. Whilst this is not necessarily a bad thing, preventing the storing up of problems for later, it means that many, especially slightly older borrowers, cannot afford the full capital and interest repayments. If you cannot prove that you have decent pension provision, it may not be possible to get a mortgage beyond normal state retirement age and this can restrict the term (and push up the cost) for your new mortgage.
• Anyone with a less than exemplary financial record will struggle even more. Clients with adverse credit history could potentially be turned down by many mainstream lenders; even those with even slightly impaired financial records so we assist those through cases through specialist lenders.
• Most mortgage schemes have ‘early repayment charges’ which are payable if you move to another lender before the scheme ends. If you are still within a scheme period and your own lender cannot give you the mortgage you require, and you have to look elsewhere, these penalties can often be high and could mean you need to delay your decision to move.

Shared ownership schemes are provided through housing associations. You buy a share of your home (25% to 75% of the home’s value) and pay rent on the remaining share. You will need to take out a mortgage to pay for your share of the home’s purchase price. These are always leasehold properties.

You can buy a home through shared ownership if:

• Your household earns £60,000 a year or less (or £71,000 a year or less in London for a 1 or 2 bedroom property, or £85,000 a year or less in London for a 3 or more bedroom property)
• You’re a first-time buyer (or you used to own a home, but can’t afford to buy one now)
• You rent a council or housing association property