Category: First Time Buyer

Why do we need to know where your deposit has come from?

As your Mortgage Broker we want to do our very best to get to know you, establish your mortgage needs and help you to take the next step on the property ladder.  To do this, we will go through your requirements, discuss your circumstances, and establish your ability to lend the money you need.

(you could start this journey by completing our simple form here) Part of this is us needing to know what your deposit is made up of and understanding where it is coming from.

I do just need to point out we aren’t just being nosey, honest! This is a regulatory requirement and it is something that your lender, whoever that may be, will need from us when we submit your mortgage application.

Your deposit could be in your savings, a Help to Buy Isa, Equity from your existing property, a divorce settlement, a lottery win (we don’t get many of these needless to say) or in fact a Gifted Deposit.

We ask this early in the process as we want to make sure we are placing you with the right lender.  I’ll go into this in further detail a little further on.

What is a gifted deposit mortgage?

One of the most difficult stages of getting on the property ladder, or even upsizing as your family grows, is having that money to put down as a deposit.  Saving that amount can be hard to do and a challenging, lengthy and sometimes the most frustrating part of the house buying process, especially for first time buyers.

However, all is not lost, and help is out there if you are lucky enough to have somebody in your life who thinks enough of you to want to give you a leg up on the property ladder.  That’s what a Gifted Deposit will help do for you.

It is an amount of money that will either enhance your own deposit or can be gifted to you as your full deposit to help you get the mortgage for the property you want to buy.

Get a Gifted Deposit Mortgage

Is it a Loan??

No… absolutely not and it’s really important to emphasise the word “Gift”!

If it were a loan, then it would be calculated as a monthly commitment that will need to be repaid and could affect your affordability in borrowing the amount you need to buy the property.

The Gifted Deposit is given to you on the understanding that it is exactly that, a Gift and will not need to be repaid.

What evidence of the Gifted Deposit will be needed?

The donor of the Gift will need to provide written confirmation of this, confirming that the Gifted Deposit does not have to be repaid nor do they hold any legal charge or legal interest in the property being purchased.

The donor will confirm in writing the amount of money they wish to Gift and what relationship they have with you, the applicant.  They will also need to provide evidence of the Gifted Deposit Funds by way of a Bank Statement as proof of where the monies are coming from.

It can differ from lender to lender how this information is captured, some lenders have their own Gifted Deposit templates which you will be provided with by your Mortgage Broker and other lenders will ask for a written letter from the donor.

It’s also worth noting your conveyancing Solicitor will do their own checks regarding the source of the deposit for Anti-money laundering procedures so don’t be surprised if you have to provide additional evidence to them further down the line when they are preparing your legal work.

They are likely to need ID from the donor amongst other evidence of where the gift is coming from. However, if we already have a lot of what they need on file which we have obtained to support your mortgage application and with the authorisation from the donor, we will do our best to help you in dealing with your solicitor to progress things as quickly as possible.

Does the Gifted Deposit have to be a certain percentage of the mortgage amount?

The Gifted Deposit amount can be as much or as little as your donor is happy to Gift you.  It can top up what you already have, even if your deposit on your new property is coming from the equity in your current house and you are upsizing for example.

It’s worth talking through with your Mortgage Broker the current rates depending on Loan to Value (The amount of deposit you have as a % of the property you are buying. For example a £20,000 deposit on a property of £200,000 is a 10% deposit, therefore, LTV is 90%.)

The more deposit you have, the better rate you get and often it can be a difference of a very small amount that will get you into that next LTV bracket and possibly a better rate so definitely consider this when thinking about how much Gifted Deposit you may be able to receive in addition to what you may already have or be able to contribute yourself.

Are there any Tax Implications regarding a Gifted Deposit?

A Gifted Deposit could have Inheritance Tax implications.

You, the home buyer and recipient of the Gifted Deposit may have to pay Inheritance Tax on the gift if the donor was to die within 7 years of gifting you that money.  If, however they live beyond the 7 years of you receiving the money, then there will be no Inheritance Tax due.  It is always advisable for the donor providing the Gifted Deposit to seek further advice from HMRC or their financial adviser regarding this.

Get a Gifted Deposit Mortgage

Who is able to provide you with a Gifted Deposit?

This is another area where a Mortgage Broker will certainly bring you added value and save you lots of time.  I mentioned it briefly at the very beginning and it is why it is important for us to understand early on in the process the source of your deposit.

We have access to over 90 lenders currently and their criteria on various aspects of Mortgage borrowing differs from Lender to Lender.  One of them certainly being Gifted Deposits.

Some lenders will only accept a Gifted Deposit from an immediate family member.  Others view this differently and will accept from a third party such as a family friend.  Some lenders will accept the Gifted Deposit from more than one donor if you are lucky enough to have a number of people wanting to gift you the money.

Our expertise will mean we will ensure we place you with the right lender for your individual circumstances.

How long does mortgage approval take? Buying a home can be a lengthy process. There are lots of viewings, mountains of paperwork, and many checks to go through before you get to the exchanging of keys and contracts.

Find out how long it takes to get a mortgage with our guide that covers everything you need to know about the mortgage application process.

If you need to borrow monies, there is no moving forward with a house purchase until you have a mortgage approved by a lender.

How long it takes to get a mortgage can depend on a number of factors, including the likes of your credit rating, the results of a mortgage valuation survey, and your income and affordability assessment.

How Long Does a Mortgage Application Take To Be Approved?

The average time for a mortgage to be approved in the UK is typically between 2 to 6 weeks.

In some cases, it can be approved as fast as 24 hours but this is typically very rare.

How Long Does a Mortgage Application Take?

So, how long does it take to get a mortgage?

There are several things that can impact how long it takes to get a mortgage – the stages involved in a mortgage application are outlined below:

Mortgage Application Process Timeline:

Mortgage in Principle

The first step of the process is usually getting a mortgage in principle.

This is simply a statement from a lender, stating that they can lend you a certain amount to purchase a home ‘in principle’.

It is a really quick process if you have all the necessary documents ready (ID i.e passport, 3-6 months bank statements, and proof of income) and have picked out a mortgage deal.

A lender will ask you for some basic information, such as your income, current financial status, etc., and will check your credit history, where they will verify you have the required credit score for a mortgage.

This is not a guarantee that a lender will definitely agree to a mortgage in the future, but it useful to have to show estate agents., as it will demonstrate that you are serious about buying.

Your estate agent will be able to show you homes that could be purchased with the loan agreed in principle.

Furthermore, an agreement in principle may speed up your application process once you have found a property you want to make an offer on, especially if you are going with the same lender.

The Mortgage Application

The next step in arranging a mortgage is the application.

Filling in your mortgage application is not a lengthy process, it should only take a few hours at the most, as long as you have your finances in order and the necessary documents and information at hand.

To determine the amount you are eligibility to borrow and your reliability to pay it back, lenders will need evidence of the following:

• Details of the property you have put an offer on, as well as information on the seller’s estate agent and proof of your deposit.
• Valid ID, such as a passport, to prove your identity and proof of your current address, such as a utility bill.
• Three months bank statements, which can be used to show what your current outgoings are, including the likes of other credit commitments, childcare, utilities, leisure time, holidays, money to savings, pension contributions, etc.
• Up to six months of payslips to provide proof of your income, including any bonuses or overtime. If you are self-employed, your accounts and a few years of tax returns will be required to determine what monthly payments you can afford.

Find a mortgage

A lender will review all this information and carry out a credit check.

If they need no further information or clarification from you, they will arrange a valuation of the property you are hoping to buy, to determine if it priced correctly and suitable for a mortgage.

There are different types of mortgages, and make sure you are aware of the fees involved in buying a mortgage.

Usually, the valuation carried out by your lender will be a ‘Standard Valuation’, which is the minimum check required by law, before a mortgage can be approved.

An independent surveyor will carry out an inspection of the property, taking note of any major issues or defects that could affect the value property.

They will also investigate what similar homes in the area have sold for, to see how your desired property compares.

They will then complete a report known as a Standard Valuation, which will be reviewed by your lender.

If you want a more detailed survey – perhaps you have been burned before – there are a couple of more thorough evaluations you can have carried out before moving forward with the mortgage process. They are:

• Full Buildings Survey – Used to be known as a Structural Survey, a Full Buildings Survey involves a comprehensive inspection of the condition of the property, including any structural abnormalities or defects, any necessary repairs, and maintenance requirements. This is useful for period properties, larger homes, or non-traditional builds.
• A Homebuyer’s Report – Includes more detailed information than a Standard Valuation, including information any current or potential future issues with the property and maintenance and/or repair costs.

If your lender is satisfied with the valuation and all other checks, your mortgage application should be approved and your offer will become official.

Sometimes, the surveyor may determine that the sale price or your offer is higher than the value of the property.

This is actually quite common and could be due to a number of issues, such a market conditions, structural defects or just a seller overestimating the value of their property.

These downgraded valuations are not just there for the protection of the lender, but also for your protection, to prevent you from paying more for a property than it is worth, as this may put you into negative equity.

However, there are still options open to you to secure a mortgage in these instances.

You can contact the seller with the results of the valuation to discuss a potential reduction in the selling price.

If this is fruitless, and you really want the property you could increase your deposit amount to make up the shortfall.

How long does it take to get a valuation done?

After you have submitted your mortgage application, your lender will instruct the surveyor to carry out a valuation, the aim of which is to ensure the property is worth the amount you are wanting to pay for it.

The surveyor will contact the estate agent in control of the property and request access to carry out a thorough inspection and survey of the property so that they can check it is structurally sound and has no obvious issues.

This typically takes a day since most surveyors will create the report on the same day as the inspection and sent it straight to the mortgage lenders underwriter.

Once the mortgage lender’s underwriter has received a copy of your completed survey, they will be checking to see if the valuation makes sense and that there are no issues with the property highlighted in the report.

From start to finish, the entire valuation process takes around 2 weeks to complete on average.

How long does it take between a mortgage valuation and offer?

After the valuation has been received from the surveyor, the lender’s underwriter will have all the required information to come to a final decision and will then be able to provide a mortgage offer.

At the point, the mortgage lender is willing to make an offer you will have it sent to through the mail. Your conveyancing solicitor will also be mailed the offer.

It can take up anywhere from 2 to 20 days to receive an offer.

How long does it take to exchange contracts?

Once your solicitor has received the offer from your lender, you should be able to exchange contracts with them in around 2 months.

During the mortgage application period, your solicitor will have been executing the conveyancing process.

This involves tasks such as applying to your local authority, for a market search, which takes around 1 month on average, although can take longer depending on how busy your local authorities property and the land department is.

Other tasks your solicitor will have been doing include communicating with the seller’s solicitors and asking relevant and important questions.

Once all of the above tasks have been taken care of, your solicitor will book a meeting with you for a pre-exchange meeting, where you can ask questions and raise any issues.

If you are happy, they will then arrange a convenient time for a final competition date.

How long does completion take?

The competition date – the day you finally get to start life in your new home.

Once the exchange of contracts has taken place, your appointed solicitor will organise the mortgage to be finalised so that you now officially own your home.

The period from the exchange of contracts to the completion date depends on both the buyer and owner.

Once you have both agreed to a date, it takes 1 week from this point since this is the amount of time it will take to receive the funds once your solicitor has notified your lender.

Typically it takes around a month from the exchange of contracts to the completion.

How Long Does a Mortgage Offer Last?

A very common question we receive is “how long does a mortgage offer last?”, generally speaking, It can take between 2 and 6 weeks to get a mortgage offer.

However, if your application is a little more complicated, such as you are looking to buy a non-standard build, or have bad credit, it may take longer.

Once your mortgage application has been approved, the offer is usually valid for 6 months. However, some lenders may have a completion deadline for their offer.

After this deadline has passed, you may be able to still use the same lender for a mortgage, but your eligibility is likely to be re-assessed as circumstances may change.

Therefore, you may have to start the application process again and your new offer may be altered depending on your current circumstances.

Is it possible to speed up the mortgage application process? 

A mortgage broker can really help with the mortgage process as they will be familiar with all of the latest deals on the market, and the ones you are most likely to be accepted for.

This will save you a considerable amount of time as you won’t have to research for the deals that are best suited to your circumstances.

Your broker will also help you to fill in your application forms and let you know what documentation you need to complete the process quickly.

Furthermore, they will handle the submitting of the application and liaising with your solicitor to get the whole process moving much quicker.

How long does it take to get a mortgage if I’ve got a poor credit history?

Getting a mortgage with poor credit is trickier. Most mainstream lenders are reluctant to loan to those with bad credit as their poor credit history doesn’t provide the assurance they need that the loan will be paid back.

However, this doesn’t mean that those with bad credit are completely ineligible for a mortgage.

There are a number of niche mortgage providers that specialise in securing mortgages for those with no credit history, or serious blemishes on their credit record.

These lenders will consider the severity of the credit issue, the duration of the credit issues, the age of the problem, along with the standard eligibility criteria for a mortgage.

It is likely that you will need to put down a larger deposit on a mortgage if you have bad credit as a bigger deposit will offset some of the risks of loaning to someone with bad credit.

You will also need documentation to prove that you can afford the monthly payments including bank statements and payslips.

Furthermore, your outstanding loans, along with any other outgoings will be assessed and may affect the amount that you can borrow.

If you have bad credit and are interested in buying a home, get in touch with an experienced mortgage broker who has access to the whole market.

They will be able to access a wider range of mortgage deals including those from speciality lenders that fit in with your requirements.

This will make the process of applying for a mortgage go much quicker than having to research individual lenders yourself, which is even more important for first time buyers.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Shared ownership mortgages 
• Gifted deposit mortgages 

Key Takeaways on your Mortgage Application Timeline

• A mortgage in principle may help to make the mortgage application process go a little smoother, by showing you and lenders what you can afford.
• A mortgage application requires valid ID & address verification, your estate agent and solicitor’s details, proof of income and outgoings and proof of deposit.
• A valuation of the property will be carried out to determine it is priced correctly and is suitable for a mortgage.
• Generally speaking, it usually takes two to six weeks to get a mortgage approved.
• The application process can be accelerated by going through a mortgage broker who can find you the best deals that suit your circumstances.
• A mortgage offer is usually valid for 6 months.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

Find a mortgage

How long does mortgage approval take? Buying a home can be a lengthy process. There are lots of viewings, mountains of paperwork, and many checks to go through before you get to the exchanging of keys and contracts.

Find out how long it takes to get a mortgage with our guide that covers everything you need to know about the mortgage application process.

If you need to borrow monies, there is no moving forward with a house purchase until you have a mortgage approved by a lender.

How long it takes to get a mortgage can depend on a number of factors, including the likes of your credit rating, the results of a mortgage valuation survey, and your income and affordability assessment.

How Long Does a Mortgage Application Take To Be Approved?

The average time for a mortgage to be approved in the UK is typically between 2 to 6 weeks.

In some cases, it can be approved as fast as 24 hours but this is typically very rare.

How Long Does a Mortgage Application Take?

So, how long does it take to get a mortgage?

There are several things that can impact how long it takes to get a mortgage – the stages involved in a mortgage application are outlined below:

Mortgage Application Process Timeline:

Mortgage in Principle

The first step of the process is usually getting a mortgage in principle.

This is simply a statement from a lender, stating that they can lend you a certain amount to purchase a home ‘in principle’.

It is a really quick process if you have all the necessary documents ready (ID i.e passport, 3-6 months bank statements, and proof of income) and have picked out a mortgage deal.

A lender will ask you for some basic information, such as your income, current financial status, etc., and will check your credit history, where they will verify you have the required credit score for a mortgage.

This is not a guarantee that a lender will definitely agree to a mortgage in the future, but it useful to have to show estate agents., as it will demonstrate that you are serious about buying.

Your estate agent will be able to show you homes that could be purchased with the loan agreed in principle.

Furthermore, an agreement in principle may speed up your application process once you have found a property you want to make an offer on, especially if you are going with the same lender.

The Mortgage Application

The next step in arranging a mortgage is the application.

Filling in your mortgage application is not a lengthy process, it should only take a few hours at the most, as long as you have your finances in order and the necessary documents and information at hand.

To determine the amount you are eligibility to borrow and your reliability to pay it back, lenders will need evidence of the following:

• Details of the property you have put an offer on, as well as information on the seller’s estate agent and proof of your deposit.
• Valid ID, such as a passport, to prove your identity and proof of your current address, such as a utility bill.
• Three months bank statements, which can be used to show what your current outgoings are, including the likes of other credit commitments, childcare, utilities, leisure time, holidays, money to savings, pension contributions, etc.
• Up to six months of payslips to provide proof of your income, including any bonuses or overtime. If you are self-employed, your accounts and a few years of tax returns will be required to determine what monthly payments you can afford.

Find a mortgage

A lender will review all this information and carry out a credit check.

If they need no further information or clarification from you, they will arrange a valuation of the property you are hoping to buy, to determine if it priced correctly and suitable for a mortgage.

There are different types of mortgages, and make sure you are aware of the fees involved in buying a mortgage.

Usually, the valuation carried out by your lender will be a ‘Standard Valuation’, which is the minimum check required by law, before a mortgage can be approved.

An independent surveyor will carry out an inspection of the property, taking note of any major issues or defects that could affect the value property.

They will also investigate what similar homes in the area have sold for, to see how your desired property compares.

They will then complete a report known as a Standard Valuation, which will be reviewed by your lender.

If you want a more detailed survey – perhaps you have been burned before – there are a couple of more thorough evaluations you can have carried out before moving forward with the mortgage process. They are:

• Full Buildings Survey – Used to be known as a Structural Survey, a Full Buildings Survey involves a comprehensive inspection of the condition of the property, including any structural abnormalities or defects, any necessary repairs, and maintenance requirements. This is useful for period properties, larger homes, or non-traditional builds.
• A Homebuyer’s Report – Includes more detailed information than a Standard Valuation, including information any current or potential future issues with the property and maintenance and/or repair costs.

If your lender is satisfied with the valuation and all other checks, your mortgage application should be approved and your offer will become official.

Sometimes, the surveyor may determine that the sale price or your offer is higher than the value of the property.

This is actually quite common and could be due to a number of issues, such a market conditions, structural defects or just a seller overestimating the value of their property.

These downgraded valuations are not just there for the protection of the lender, but also for your protection, to prevent you from paying more for a property than it is worth, as this may put you into negative equity.

However, there are still options open to you to secure a mortgage in these instances.

You can contact the seller with the results of the valuation to discuss a potential reduction in the selling price.

If this is fruitless, and you really want the property you could increase your deposit amount to make up the shortfall.

How long does it take to get a valuation done?

After you have submitted your mortgage application, your lender will instruct the surveyor to carry out a valuation, the aim of which is to ensure the property is worth the amount you are wanting to pay for it.

The surveyor will contact the estate agent in control of the property and request access to carry out a thorough inspection and survey of the property so that they can check it is structurally sound and has no obvious issues.

This typically takes a day since most surveyors will create the report on the same day as the inspection and sent it straight to the mortgage lenders underwriter.

Once the mortgage lender’s underwriter has received a copy of your completed survey, they will be checking to see if the valuation makes sense and that there are no issues with the property highlighted in the report.

From start to finish, the entire valuation process takes around 2 weeks to complete on average.

How long does it take between a mortgage valuation and offer?

After the valuation has been received from the surveyor, the lender’s underwriter will have all the required information to come to a final decision and will then be able to provide a mortgage offer.

At the point, the mortgage lender is willing to make an offer you will have it sent to through the mail. Your conveyancing solicitor will also be mailed the offer.

It can take up anywhere from 2 to 20 days to receive an offer.

How long does it take to exchange contracts?

Once your solicitor has received the offer from your lender, you should be able to exchange contracts with them in around 2 months.

During the mortgage application period, your solicitor will have been executing the conveyancing process.

This involves tasks such as applying to your local authority, for a market search, which takes around 1 month on average, although can take longer depending on how busy your local authorities property and the land department is.

Other tasks your solicitor will have been doing include communicating with the seller’s solicitors and asking relevant and important questions.

Once all of the above tasks have been taken care of, your solicitor will book a meeting with you for a pre-exchange meeting, where you can ask questions and raise any issues.

If you are happy, they will then arrange a convenient time for a final competition date.

How long does completion take?

The competition date – the day you finally get to start life in your new home.

Once the exchange of contracts has taken place, your appointed solicitor will organise the mortgage to be finalised so that you now officially own your home.

The period from the exchange of contracts to the completion date depends on both the buyer and owner.

Once you have both agreed to a date, it takes 1 week from this point since this is the amount of time it will take to receive the funds once your solicitor has notified your lender.

Typically it takes around a month from the exchange of contracts to the completion.

How Long Does a Mortgage Offer Last?

A very common question we receive is “how long does a mortgage offer last?”, generally speaking, It can take between 2 and 6 weeks to get a mortgage offer.

However, if your application is a little more complicated, such as you are looking to buy a non-standard build, or have bad credit, it may take longer.

Once your mortgage application has been approved, the offer is usually valid for 6 months. However, some lenders may have a completion deadline for their offer.

After this deadline has passed, you may be able to still use the same lender for a mortgage, but your eligibility is likely to be re-assessed as circumstances may change.

Therefore, you may have to start the application process again and your new offer may be altered depending on your current circumstances.

Is it possible to speed up the mortgage application process? 

A mortgage broker can really help with the mortgage process as they will be familiar with all of the latest deals on the market, and the ones you are most likely to be accepted for.

This will save you a considerable amount of time as you won’t have to research for the deals that are best suited to your circumstances.

Your broker will also help you to fill in your application forms and let you know what documentation you need to complete the process quickly.

Furthermore, they will handle the submitting of the application and liaising with your solicitor to get the whole process moving much quicker.

How long does it take to get a mortgage if I’ve got a poor credit history?

Getting a mortgage with poor credit is trickier. Most mainstream lenders are reluctant to loan to those with bad credit as their poor credit history doesn’t provide the assurance they need that the loan will be paid back.

However, this doesn’t mean that those with bad credit are completely ineligible for a mortgage.

There are a number of niche mortgage providers that specialise in securing mortgages for those with no credit history, or serious blemishes on their credit record.

These lenders will consider the severity of the credit issue, the duration of the credit issues, the age of the problem, along with the standard eligibility criteria for a mortgage.

It is likely that you will need to put down a larger deposit on a mortgage if you have bad credit as a bigger deposit will offset some of the risks of loaning to someone with bad credit.

You will also need documentation to prove that you can afford the monthly payments including bank statements and payslips.

Furthermore, your outstanding loans, along with any other outgoings will be assessed and may affect the amount that you can borrow.

If you have bad credit and are interested in buying a home, get in touch with an experienced mortgage broker who has access to the whole market.

They will be able to access a wider range of mortgage deals including those from speciality lenders that fit in with your requirements.

This will make the process of applying for a mortgage go much quicker than having to research individual lenders yourself, which is even more important for first time buyers.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Shared ownership mortgages 
• Gifted deposit mortgages 

Key Takeaways on your Mortgage Application Timeline

• A mortgage in principle may help to make the mortgage application process go a little smoother, by showing you and lenders what you can afford.
• A mortgage application requires valid ID & address verification, your estate agent and solicitor’s details, proof of income and outgoings and proof of deposit.
• A valuation of the property will be carried out to determine it is priced correctly and is suitable for a mortgage.
• Generally speaking, it usually takes two to six weeks to get a mortgage approved.
• The application process can be accelerated by going through a mortgage broker who can find you the best deals that suit your circumstances.
• A mortgage offer is usually valid for 6 months.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

Find a mortgage

When budgeting for buying a house there is so much more to take into consideration than the cost you’re willing to go to for your property.

The deposit that you are initially putting down is only the start of the outgoing costs of buying a home.

There are the likes of fees, stamp duty, and other charges that you will be expected to pay, both before completion and after completion.

To help you with your budgeting when buying a house, we have put together a guide on all the fees you can expect to pay and when you may expect to pay them.

Fees Before Completion

Long before you get the keys to your new home, there are numerous fees and cost that you need to pay. Here are the fees that come prior to completion.

Mortgage Costs

There are quite a few fees involved in the process of securing a mortgage.

• Deposit – The deposit for your home is the biggest cost you will have to pay before completion. How much you will pay depends on the cost of the property and the type of mortgage you signed up for. For example, if you went for a 90% mortgage, you would need to put down 10% of the property’s value as a deposit.
• Arrangement Fee – This is charged by your lender primarily for their administration costs. These fees are now an integral part of a mortgage and often directly affect your lender’s interest rate. You can either pay the arrangement fee up front or you can add it onto the cost of your mortgage. If you add the arrangement fee on the cost of your mortgage you will be paying interest on it, but if you pay up front and something goes wrong with the purchase, you may lose the money entirely.
• What you may choose to do is to add the fee onto your mortgage and then immediately overpay your mortgage upon completion to pay it off straight away to avoid extra interest. Most lenders allow an overpayment of 10% of the outstanding mortgage balance each year without penalties, but it is always a good idea to check with your provider to make sure.
• Booking Fee – There are a few lenders that may charge you a booking fee to secure you a good rate on a tracker, fixed-rate, or discount mortgage. The cost is usually no more than £200, but it is non-refundable.
• Valuation Fee – Charged by your lender, the valuation fee covers the cost of determining your property’s worth. This is so your mortgage provider knows they can get a decent return on their investment if you fail to keep up with repayments. It, therefore, determines how much your mortgage provider is willing the lend you. The valuation fee depends on the purchase price and type of valuation chosen. Sometimes the lender will offer a free basic valuation.

If you are wondering how long a mortgage application takes to approve, the answer is that it depends on a range of factors. Make sure you are aware of the credit score requirements before you submit your application and the fees involved in buying a property.

Homebuyers Report/Full Structural  – You are not required to pay for a detailed survey but it is certainly recommended. This would give you a thorough report on the property and whether there are any issues that need to be dealt with, such as structural problems, damp, or plumbing issues.

If there are any problems, this survey may be used to renegotiate a better price. A full structural survey usually costs between £400 and £700 although a Homebuyers Report is cheaper and may be discounted through the lender.

Mortgage Broker Fee – You may need to pay your mortgage broker for acting as an intermediary between you and the lender. With some brokers, you may need to pay a fee upfront to get the process moving and a final fee upon completion.

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Stamp Duty and Land Tax

Stamp Duty is a government tax in England and Wales that is paid on homes costing more than £125,000.

However, if you are a first-time buyer, you get a little more leeway and will only pay Stamp Duty on the first £300,000 for properties costing up to £500,000. For house costing between £125,001 and £250,000, buyers will pay 2%.

For houses costing more than £250,000, the buyer will pay the 2% and then 5% on the amount that is over £250,000 up to £925,000.

Between £925,001 to £1,500,000, you will pay 10%, and on the amount above £1,500,001, you will pay 12%.

If you live in Scotland, instead of Stamp Duty you will pay the Land and Buildings Transaction Tax Rate.

You don’t have to pay this on the first £145,000, pay 2% on the cost between £145,001 and £250,000, and pay 5% on the cost of your purchase between £250,001 and £325,000.

Our expert mortgage advisors will be able to give you further information on the Stamp Duty and Land tax you can expect to pay, depending on the cost of your intended property.

Solicitor Fees

You will require a solicitor to take care of all the legal work that comes with buying a home. These include dealing with transferring ownership between parties, checking for any hidden problems that could affect you immediately or in the future, checking that your paperwork is correct, and registering the property in your name with the Land Registry. Some mortgage companies in England and Wales will cover these fees if you go with one of their chosen solicitors. Alternatively, your provider may give you some cash back on completion to go towards the legal costs.

Expect to pay around £1,000 to £2000 in legal fees that will be paid throughout the buying process and upon completion. You can use your own solicitor, but they will have to be agreed upon by the mortgage company as they will handle the legal work for all parties.

Insurance

Your lender will not accept any mortgage application without buildings insurance, which will protect both your and their investment against fire, subsidence, flooding, etc.

Although it not required by lenders it is also wise to have contents insurance to cover your possessions, as well as life insurance that will pay off the mortgage if something were to happen to you.

Fees After Completion

Even after you have exchanged keys and contracts, there are some extra costs and payments, some of which are ongoing. These include:

Ground Rent and Service Charges

There could be further fees to pay upon completion of your house purchase, such as if your property is a leasehold, where you don’t actually own the land, instead of paying to rent it from the freeholder for many decades. In these cases, you might have to pay a service charge for upkeep as well as ground rent.

If you are moving to a freehold, which has communal areas, which are shared by a number of neighbours, you will probably have to pay a monthly maintenance cost for the upkeep, such as gardening costs, fixing the roof etc.

Moving Costs

Moving can be an expensive business – the cost of a removal company could cost between £100 and £1000 depending on the amount of stuff you need to be transported. You could save yourself some money if you have some willing friends and family members that can help you out. Even better if one of them has a van.

Mortgage Repayments

Make sure you sign up for a mortgage that you can actually afford. Failure to pay your mortgage could result in your home being repossessed. In the years following your house purchase regularly reassess your mortgage options to ensure that you are always getting the best rate you can. It could save you thousands of pounds over the term of your mortgage.

Furnishings and Decorating

It is important to factor into your budget any furniture, white goods, or decorating that your new house will need to make it liveable to the standard you would like.

This is especially true if you currently rent a furnished place, as you will need everything – you really don’t realise how much stuff it takes to make a functional home until you buy your first home. From the small things like lightbulbs and cutlery to the big stuff like beds and the boiler (expect to pay somewhere in the region of £1,500 – £2,000 for one of the best combi boilers!). All these costs add up, so you will need to be sure you have some money put aside in your budget unless you want to live in a shell for a few years.

Make sure you know what comes included within the cost of your home – if the likes of the white goods are not written down in the contract, you cannot be sure that they will be included in the sale. You need to be aware of any extra costs.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Shared ownership mortgages 
• Gifted deposit mortgages 

Or if you want a more general overview check out the different types of mortgages.

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If you’re in the UK, there is no minimum credit score that you need to buy a house.

There is no “holy grail” number that your score needs to reach in order to qualify for a mortgage.

This is because there is no universal credit score. In fact, your credit rating can even vary between different lenders and credit reference agencies.

In this post, we’ll explore credit scores in more detail, and explain how you can improve your score to get the mortgage you want.

How does my credit score affect my mortgage application? 

When you apply to take out a mortgage (or any other type of loan), lenders will look at your credit score.

This will help them to determine how much risk is involved when lending to you. Are you a reliable borrower, or will you struggle to repay the debt?

Normally, a high credit score means you’re a low risk borrower. In this case, you’ll often be accepted for a mortgage, sometimes even with a better interest rate than someone with a lower credit score.

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 How much does my credit score matter when applying for a mortgage?

Yes, it’s important, but getting approved for a mortgage isn’t all about your credit score.

Mortgage lenders want to check that you can afford your mortgage repayments before they agree to lend you any money.

Alongside looking at your credit history, they’ll also take into account how much you earn. They’ll even assess other monthly costs such as childcare and transport, to ensure that you can afford the mortgage repayments.

It’s also worth remembering that lenders may be more willing to lend to you if you are able to put down a large deposit. If you’re only able to put down a small deposit, lenders may require a higher credit score to make up for it.

 Recommended reading: What are the different types of mortgages and what fees are involved in buying a home? 

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

• Family deposit mortgages 
• Shared ownership mortgages 
• Gifted deposit mortgages 

How can I improve my credit score?

If your credit score is low, there are plenty of things you can do to try and increase it before applying for a mortgage.

Whether it’s simply making sure that you’re registered on the electoral role, or checking for errors in your credit report, you’d be surprised how much the little things can make a big difference.

The main things to consider when looking to improving your credit score are:

• Make sure you’re on the electoral roll.
• Ensure all your bills are paid on time.
• Check if there are any mistakes or incorrect financial links to other people on your credit reports.
• Avoid several credit applications in a short space of time.
• Try and reduce your levels of debt before applying for a mortgage.

It’s also important to prove to lenders that you’re capable of managing your finances, especially if you are a first time buyer. If you always pay your bills and pay off your credit card balance on time, your credit score will slowly begin to rise.

If you want to speak to us about applying for a mortgage, one of our friendly advisors would be happy to help. You can contact us on 01925 918960. 

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