Help to Buy Mortgage Schemes for First Time Buyers in Doncaster
Help to Buy Mortgage Advice in Doncaster
After the events of the unfortunate credit crunch back in 2008, the government introduced backup as a means of boosting the damaged mortgage market.
They introduced a variety of methods to help First Time Buyers in Doncaster find their spot on the property ladder. The methods brought in were called Help to Buy Schemes.
There are a few different Help to Buy Schemes that are available, each with varying eligibility criteria to meet. Here is a list of the most common schemes you’ll come across for a Help to Buy in Doncaster.
Help to Buy Shared Ownership Scheme
The Help to Buy Shared Ownership Scheme allows people to purchase only a share of a property, paying the remaining amount owed as a monthly rental fee to your local authority, who will own the remaining share.
You’ll generally be earning a percentage that is somewhere between 25-75%, though this is not always the case. If you come into more money, you may have the option to potentially increase your shares.
Regarding your rental income, you will essentially be paying 100% of the ground rent and service charge on the property.
Help to Buy Armed Forces Scheme
The Armed Forces Help to Buy Scheme was brought in by the government back in 2014, following on from the success of the Help to Buy Equity Loan Scheme.
It is similar in concept to the original Help to Buy Scheme, helping first time home buyers who have served in the military, to find their own place on the property ladder.
If you happen to meet the criteria for this particular mortgage scheme, it could be a great way to help home buyers get onto the property ladder when they otherwise may not be able to.
The government has made this now an enduring policy. We are hoping this stays around, as not only a way to thank the armed services with a financial boost, but to also help them to own their own home.
Bonus: Lifetime ISA
Whilst technically not a Help to Buy Scheme variation, the Lifetime ISA is often a scheme that people forget about. The reality is, is that it can be a very helpful tool for helping you to purchase your first home as a First Time Buyer in Doncaster.
The function of this, is that it is basically a savings account for finances to grow, free of tax. You’ll get a yearly government top-up of 25%, with a capped amount of £4,000. This means if you go with the maximum amount, you’ll get a nice £1,000 bonus!
In order to access this, you will need to meet very specific lending criteria. Full information can be found on the Lifetime ISA website.
A Guide to Offset Mortgages in Doncaster
The overall desire for using offset mortgages has dwindled since the 1990’s, though they are still viable options for customers who are looking to put aside a portion of disposable income.
They’re also really handy if you believe at some point you are going to come into a lump sum of money.
How Do Offset Mortgages Work?
In order for a mortgage lender or any kind of loan provider to be able to lend money to clients, they need to have a source of funds to draw from.
That is the point of savings, and is why you gather interest on what you pay in. In exchange for having an account with them, you are rewarded.
The way that an offset mortgage works, is that you will be given a savings account by a mortgage lender (typically one who is a bank or building society), alongside your mortgage balance.
When you pay into your savings, your mortgage balance decreases by how much you paid in. If you take out of your savings, that mortgage balance increases by how much you took out.
You still pay a monthly mortgage payments towards reducing your balance, as you would on a standard mortgage, but you only pay interest on what is remaining on your balance, not your savings.
For example, if your mortgage is worth £100,000 and you have £50,000 in savings, then you pay interest on the remaining £50,000.
If, hypothetically, after a while you were able to pay off some of your mortgage, bringing that amount down to £45,000, but then draw £15,000 out of your savings, your balance increases to £65,000 and you receive a new set of mortgage payments per month.
This also means you’ll be paying more on interest, as there is a higher amount remaining in your mortgage balance. In addition to this, the general interest on the mortgage side of things, will typically be higher than a standard mortgage anyway.
Is an Offset Mortgage a Good Idea?
Offset mortgages don’t tend to be that popular anymore, but they are still really handy to have in certain situations. Perhaps you are due a lump sum at some point in the future, such as a future inheritance from a family member.
Because this account allows you to freely deposit and withdraw your money as you see fit and is interest-free, it’s a handy place to store any additional savings until you know what you want to do with them.
Another circumstance where these can be very beneficial, is if you have a well-paying career and are due monthly, quarterly or annual sizeable bonuses from your job, that don’t factor into day-to-day living expenses.
You can place this disposable income into your savings account, lower your monthly payments, meaning you are paying interest on a lower amount.
Overpaying Your Mortgage
An offset is also an excellent opportunity for First Time Buyers in Doncaster who want to overpay on their mortgage.
Overpaying allows you to reduce your mortgage payments for your next mortgage term, leading to a reduction on your interest rates too, with any additional mortgages you take out.
The difference with regular overpayments, is that you won’t have a savings account, you’ll just be paying off your balance. This means you can’t dip into it as an emergency fund if you need to, or if you change your mind on that overpayment.
Offsets are great for people who want to do this as you do have a savings account. This means if you want to overpay and reduce your balance, you can just pay into that savings account. If you want to take out some of what you paid in for any reason, you have the freedom to do so.
So, if you’re looking to make regular additional payments on your mortgage over time, we would absolutely recommend taking advantage of an offset savings account as you go.
Help From an Expert Mortgage Broker in Doncaster
Speaking to a trusted and experienced mortgage broker in Doncaster like us, is a good way to understand what options are available to you ahead of time.
Offset mortgages are great, but they might not be right for you, which is something a mortgage advisor in Doncaster will check before you proceed.
Generally speaking, we find that customers who have offset mortgages, won’t remortgage in Doncaster, as they will just keep their current mortgage going.
If you have any questions or need any help regarding offset mortgages, book your free mortgage appointment today using our online booking feature, and we’ll see how we can help you out. We are here from early until late every day, subject to appointment availability.
Armed Forces Help to Buy Scheme in Doncaster
Forces Help to Buy Mortgage Advice in Doncaster
It was originally introduced back in 2014, with a huge £200 million put into the scheme. The intention was to provide a boost to anyone from the forces who needed some help in purchasing a home. The project was supposed to be brought to an end in December 2019.
To show their gratitude for the military’s commitment to their Queen and country, our government chose to extend this scheme further, choosing instead to make this an enduring policy.
Who can apply for Forces Help To Buy Scheme?
Anyone who has served some time in the military may be able to access the scheme and borrow a deposit of up to half their annual salary (a maximum of £25,000), free of any interest.
Of course you do have to be eligible, with this all depending on the length of the term served, how much you have left to serve and medical categories.
The Armed Forces Help to Buy Scheme can be used to either purchase their first home purchase or to move into a new home if you already own one.
Whether you previously thought you could or not, you now have a home buying lifeline if you are indeed eligible for it.
One of the best parts about this mortgage scheme, that is appealing to many home buyers, is that you don’t actually need any current savings in order to find your footing on the property ladder.
The funds will be raised from the loan that you receive via the Armed Forces Help to Buy Scheme and can be used to put towards your deposit as well as any other costs, including but not limited to;
- Stamp duty
- Estate agent fees
- Solicitors fees
This scheme is a lot more relaxed than some other schemes available, and the Forces Help to Buy loan can be paid back over a duration of around 10 years, so you have no reason to feel rushed about paying it back.
For more information on this scheme from the government, click here.
How a Mortgage Advisor in Doncaster May Be Able to Help
As an experienced mortgage advice team in Doncaster, we will have your back from the first time you call up, right through until competition and even beyond that.
Your dedicated advisor will take care of you all throughout your mortgage journey, ensuring that you end up with the most appropriate mortgage result for your personal and financial circumstances.
We truly do pride ourselves on being able to provide a fast and friendly customer experience that is free of stress and worry. Get in touch with us today and we will see how we are able to further you and your home owning dreams.
It is important to remember that the Forces Help to Buy is not the same as the typical UK Help to Buy scheme.
What is a Tracker Mortgage?
Tracker Mortgage Advice in Doncaster
If you have done your research prior to getting in touch with an open and honest mortgage broker in Doncaster, you may have come to realise there are a lot of different mortgage types available to first-time buyers, all varying on the circumstances they are appropriate for and who is eligible.
Throughout this article, we are going to take a more in-depth look at the tracker mortgage, how it could benefit you and your mortgage situation, as well as why it is a popular choice amongst homebuyers.
First of all, please remember that a mortgage deal is only as good as the circumstances it matches up with, so though it may seem good on the surface, it may be the wrong path to take entirely.
To give out an example of what we mean here; Initially you could take out a tracker mortgage, only for you to later decide that fixed payments would’ve been your preferred option (via a fixed-rate mortgage). Once you’re at this point, you have already locked yourself into a contracted agreement and making changes wouldn’t be an option.
As a reputable, experienced and hardworking mortgage broker in Doncaster, we will always recommend that you get yourself prepared and making sure you are well researched prior to your mortgage journey getting underway.
We feel like home buyers would truly benefit greatly from taking up expert first time buyer mortgage advice in Doncaster.
As an alternative to our article, we also have a YouTube video on the same topic readily available for people to watch. Feel free to head on over to our moneymanTV channel to view more helpful video guides, presented for free by the ‘Moneyman’ himself, Malcolm Davidson.
What is a tracker mortgage?
Well, now let’s get down to business. I’m sure the first thing you want to know is; What is a tracker mortgage?
So if you were to find yourself on a tracker mortgage, your interest rate would move along with the Bank of England’s base rate and typically with an additional percentage added on top by your mortgage lender.
Your lender cannot choose the rate, as this is usually an externally set rate and will have to be followed strictly.
An example of this would be if the Bank of England’s base rate was running at 1%, your lender would have to add on another set amount, let’s say 1%.
This means that regardless of what the Bank of England’s rate percentage is, your interest rate will always remain just above that figure.
Will a tracker mortgage in Doncaster benefit me?
A tracker mortgage can be incredibly useful if the Bank of England’s rate is running at a slightly lower rate. It will generally sit around 0-1%, though as the year goes on it will naturally go up a little bit.
Previously, during the credit crunch in 2007-2008, the market plummeted and interest rates went sky high. At it’s highest, it was sitting around 5%.
Of course when adding on the percentage that your lender would add on top of this figure, you could’ve ended up with a rather sizable 6% interest on your monthly mortgage repayments.
On the other side of the coin, looking back to March 2020 (around the start of the coronavirus), the mortgage market had a similar scare when the Bank of England’s rate dropped significantly, dropping a down to an incredibly low 0.1%.
If you were on a tracker mortgage during this period of history, the chances are that you would’ve also dropped down to an interest rate of somewhere around 1.1%.
Naturally because of this, a lot of lenders simply stopped offering this mortgage type to their customers, as really it would’ve been too good to be true. A mortgage lender is still a business at the end of the day and need to turn a profit.
Nowadays the market seems to be almost back in full swing and customers do have better chances now of obtaining a tracker mortgage than they would’ve before, especially one that will be well suited to your financial circumstances.
A tracker mortgage does have both it’s ups and downs, as it will rely pretty massively on the economy. If anything happens to the market and the Bank of England’s rate goes high once again, a tracker mortgage is definitely not the sort of mortgage to go for.
On the flip side of that argument, if the situation is that the economy is doing extraordinarily well with a low Bank of England base rate, a tracker mortgage is one we could definitely look at for you, as you may benefit well from it. Again though, this also depends on what you’re looking to do.
Different Types of Mortgages in Doncaster
There are a wide variety of mortgages types available out there for prospective first time buyers in Doncaster and existing homeowners alike, it’s just finding the one that is right for your personal and financial needs.
Before taking the big leap into any mortgage deals, we would definitely suggest that you speak to a trusted mortgage advisor in Doncaster about what paths are open for you to walk. They will try and find you the best deal they can.
If you are a first time buyer in Doncaster, we believe you’ll benefit immensely from our dedicated mortgage advice service. We have over two decades of experience in the mortgage world and have expert knowledge on various mortgage lender criteria.
We are also available to speak with and provide assistance to any customers looking to remortgage or move home in Doncaster. We hope you will find our mortgage advice service invaluable.
As your hardworking and responsive mortgage advisors in Doncaster, we will work alongside you from beginning until end, offering you mortgage guidance and support all throughout your journey.
Agreement in Principle: Hard & Soft Credit Searches
As more and more time goes on, consumers seem to becoming much more savvier when it comes to their credit score. This is increasingly the case in those who are applying for first time buyer mortgages in Doncaster.
Of course the media contributes to this, with finances becoming much more publicly discussed. We actually find regularly that most of the customers who have contacted us for mortgage advice in Doncaster, have actually already taken a look at their credit report online.
Popular websites/apps for credit referencing are always Experian and Equifax, though there are plenty of them out there. We personally would recommend Check My File to new customers, as they can benefit from a 30-day free trial, which can be cancelled at anytime, otherwise going out at £14.99 a month.
They offer a colour-coded report that is easy to follow and can provide an overview of your credit, with information pulled from various sources, such as the aforementioned Experian or Equifax.
We usually find that customers are also now much more aware of the things that can negatively impact their credit score, one of which we will discuss in this article, that being having too many credit searches.
Of course, everyone gets credit searches taken out on them when they apply for any credit. Mortgages, loans, phone contracts, everything.
As a mortgage broker in Doncaster, we personally do not carry out any credit checks on you, though your mortgage advisor will ask for permission from you, as the mortgage lender will be conducting one of these.
Credit searches will usually come in one of two forms, those being a soft search or a hard search.
What is a hard credit search?
A hard credit search is where a mortgage lender will take a much more in-depth look at your credit report. Any company taking one of these out on you must seek permission before doing so, as they can (although not always) impact your credit score.
The bonus for customers having a hard credit search taken out on them is that your mortgage lender will already have a more complete overview of your financial state. If you are able to pass this, you are likely to achieve mortgage success.
This is not always a guarantee in any situation, but it is certainly a good sign. Hard searches leave a credit footprint on your file, which is a record that a hard credit search was taken out. A successful one can boost your credit score.
The issue is, the footprint doesn’t actually show whether it was successful or not. This means that if you are having multiple taken out on you (whether you failed previous ones or are just having multiple done for some reason), this can actually go against you and cause you to be declined.
The reason for this, is that multiple credit searches taken out in a small amount of time can make it seem like you’re applying for lots of credit in one time, which not only harm your credit score but put off a mortgage lender.
This isn’t to say that having a few will be too detrimental, there’s no need to worry too much, just always make sure you are cautious when having credit checks.
What is a soft credit search?
Quite the contrary to a hard search, soft searches are much less in-depth and would most likely be found with say, a price comparison website or as a means to verify your identity. More and more mortgage lenders these days, are also swapping to soft credit searches.
When a soft search is taken out on you, the company conducting the check will not be getting as much information as would’ve been the case if someone else had carried out a hard search. That being said, soft searches are incredibly unlikely to have any impact on your credit file.
Whilst less information is taken from these searches, if the end result is you obtaining a mortgage agreement in principle from the mortgage lender, the difference between hard and soft searches doesn’t necessarily matter, as an AIP is the goal anyway.
Further to these benefits, whereas a hard search can be seen by both yourself and other financial institutions, soft searches are not, only being able to be seen by you and nobody else. That means you can be unsuccessful in one instance and not worrying so much about the ramifications.
Benefits of an Agreement in Principle
If you would like to look at making an offer on a property, we would always recommend having an AIP to hand, as they will become a big help in your quest for mortgage success. These documents showcase to the estate agent and seller, that you’re in a position to proceed and have a mortgage lender waiting.
This puts you head and shoulders above anyone else who doesn’t have this, except maybe a cash buyer. As a mortgage broker in Doncaster, we are typically able to obtain a mortgage agreement in principle for you within 24 hours of your initial mortgage appointment.
Plan Ahead to get a Mortgage in Doncaster
Once you have saved up a large enough sum of your income to put forward as your deposit, it is now time for you to get prepared for a mortgage!
We have put together a comprehensive list of some helpful, beneficial advice that will hopefully ensure you’re as mortgage ready as you possibly can be!
Up-to-Date Credit Report
The first thing you should always have at the top of your list of things to do, is getting yourself an up-to-date credit report.
This is something that you should even do before you get in touch with a dedicated mortgage broker in Doncaster like ourselves for mortgage advice, as this will help make the process easier for you.
It is definitely a good idea to pay off any payments that you still have outstanding on your balance, even if you are holding back based on principle. We do sometimes hear of customers refusing to pay phone bills whilst in a dispute with the provider and it’s not something we recommend!
In doing this, you’ll have less going against you and can increase the likelihood of being able to obtain a mortgage. A helpful tip to remember is to make sure you’re on the voters roll, as that apparently has a positive effect on your credit score. Closing down any of your old credit cards also can be helpful.
Your dedicated mortgage advisor in Doncaster will be able to run through your credit report in the early stages of your mortgage journey, providing expert mortgage advice on what you can do to present your credit in the best light.
Proof of Identification
In the beginning stages of your home buying process, you will be asked to present some photo ID. Our customers usually prefer to put forward a driving license or passport to help with this.
Your driving license is something that you can also utilise for your address as well, though if you use it for proof of address, you can’t use it for proof of ID as you must have one for each, not one for both.
Any non-UK nationals who are now living within the UK will need to show us a copy of their Visa on top of this.
Proof of Address
On top of proving your identity, you will also need some documents that can prove where your residence is. Generally speaking we find that regarding these, customers opt to use a utility bill or original bank statement that has a date of the last 3 months.
Alternatively, as mentioned above, if you choose to use a passport for photo ID, you can use your driving license as proof of address alongside it.
Last 3 Months’ Bank Statements
Your bank statements will be used as a means of evidencing your income and regular spending habits. If you’re a frequent gambler, we highly suggest avoiding gambling well in advance, as lenders do not like to see this on bank statements.
The same will apply in regards to going past overdraft limits and letting direct debits bounce. You must ensure you are as prepared as possible in order to present yourself as appealing to a mortgage lender.
Most lenders will want to take a look at your bank statements, as they like to go into the mortgage lending process with complete confidence that you are serious about your finances.
The bank statements usually needed are the ones that show your salary going in, and your bills and regular payments going out.
Evidence of Deposit
You will have to prove that you definitely have the funds in place to put forward for a deposit and be able to evidence this for the purposes of anti-money laundering.
We always feel that the best practice in this case, is to limit moving money around your accounts, as otherwise the audit trail can be a little more complicated.
Lenders have a preference of seeing your savings built up over time, so you’ll need to account for any large amounts that have been transferred into your accounts within any recent period of time.
Nowadays, we find that the deposits being put forward for properties are often gifted by family members. These are an increasingly popular way forward for first time buyers in Doncaster looking to find their footing on the property ladder.
These need to be evidenced also, with the person who has gifted you the money being required to sign a letter confirming it is purely a gift and not a loan that you are expected to pay back at a later date.
Proof of Income
The most important thing when it comes to affordability is proving your income. This is often your last 3 months of payslips if you’re employed, with some lenders needing to see your most recent P60.
Lenders may also consider regular overtime, shift allowance, bonuses, and commission. If you have more than one employer (maybe you have a part-time job or are self-employed in Doncaster), lenders will also accept earnings from those.
These days, many applicants are self-employed and seeking fast and friendly Mortgage Advice in Doncaster. Self-employed applicants will need help from their accountants to request their last 2-3 years’ proof of earnings from the Revenue.
Our mortgage advisors in Doncaster are able to talk you through what to download from the Government Gateway if you’re in control of your own accounts.
Budget Planner
It’s always smart to plan ahead and do your homework, creating an estimate of what you expect your outgoings to be after you move into your new home. This helps you to figure out roughly how much your council tax and utility bills will be, with any regular expenditures like food and drink added on as well.
It’s also helpful in showing you how much disposable income you’ll have available to pay your mortgage from. We’ll send you our version of a budget planner prior to your mortgage appointment, in hopes that you’ll find it handy to have.
Getting Prepared For a Mortgage
As you can see from what has been mentioned in this article, it’s not super easy to get prepared for a mortgage, though by planning ahead and being careful, you it’ll be quite a bit easier! Putting in the hard work and remaining patient will definitely go a long way during your mortgage journey.
What is a 95% Mortgage?
A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender.
95% Mortgage Advice in Doncaster
Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.
This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Doncaster will be able to look at, to see if you qualify.
All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.
Can I get a 95% mortgage?
95% mortgages are usually accessible by both First-Time Buyers in Doncaster & those who are Moving Home in Doncaster. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.
Improving your credit score
A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.
Affordability
Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.
Can my family help me get a 95% mortgage?
Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage.
How do I choose the right 95% mortgage?
When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation.
Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.
Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.
How can a bigger deposit help with my mortgage?
Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not.
There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as.
A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property.
So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future.
Our 10 Step Mortgage & Home Buying Guide for First-Time Buyers
In this article we have put together a comprehensive list of the 10 steps involved in the mortgage process for First-Time Buyers in Doncaster, allowing for you to be as prepared as possible heading into your oncoming mortgage journey.
The 10 steps to the process of home buying and obtaining a mortgage are as follows;
- Free Mortgage Consultation
- Mortgage Affordability Assessment
- Agreement in Principle
- Find A Solicitor
- Make an Offer
- Submit Your Documents
- Formal Mortgage Application
- Valuation/Survey
- Mortgage Offer
- Completion
First Step: Get in Touch for Your Free Mortgage Consultation
So, you’ve decided to purchase your first home and obtain a mortgage as a First-Time Buyer in Doncaster. Without a doubt going to be one of the biggest financial commitments you make throughout your life. Once you realise this, the notion can be a little jarring, especially when you have no experience in the property market.
Once you’ve reached this point, a dedicated mortgage broker in Doncaster will be able to step in and help you along your mortgage process. It is our goal to reduce your stress and work hard to ensure you come out the other side with a mortgage and your first home, happy and with a deal that benefits you.
When you Get in Touch with us, we’ll get you booked in for a free initial mortgage consultation with an experienced mortgage advisor in Doncaster. Here we’ll take some information for you and look at what you’re planning to do, prior to starting your process.
Second Step: Mortgage Affordability Assessment – How are you doing Financially?
One thing your dedicated mortgage advisor will be able to run through in your free mortgage consultation, is a Mortgage Affordability Assessment. This is where they will run through your monthly income and regular expenditures (the things you spend your money on), to determine whether or not you are able to afford the monthly repayments of the amount you are looking to borrow from the lender for a mortgage.
The importance of this comes from us needing to be absolutely confident that you can afford your repayments with the lender. This will hopefully help avoid arrears and potential future repossession, something the lender will desperately try to avoid.
A Mortgage Affordability Assessment is something the lender will usually do their own checks on, so our initial check will help save the time of the lender, ourselves and more importantly you, from an application that you may find being declined on due to failed affordability.
Third Step: Obtaining a Mortgage Agreement in Principle
The following step in your consultation will be the process of obtaining a Mortgage Agreement in Principle. If you’ve been reading up on mortgages prior to getting in touch for First-Time Buyer Mortgage Advice in Doncaster, it is likely you will have noticed this is a polyonymous term, also found under various similar names. These names often include ‘Decision in Principle’, ‘Mortgage in Principle’, as well as the abbreviations ‘DIP’ & ‘AIP’. There isn’t any difference between these besides this, they are all the same thing.
The intended purpose of a Mortgage Agreement in Principle is to document that you have passed the initial credit scoring system of a lender, either via a hard credit search (which can leave a credit footprint) or a soft search (which usually will not leave a credit footprint).
Obtaining this does not guarantee you will be accepted on a mortgage, but is something you must do on your way to the final goal. One of the other benefits of getting this document, is that it will show the seller of a property that you are very serious about purchasing the property, possibly creating room for price negotiations.
A typical Agreement in Principle will usually last somewhere between 30-90 days, and if it is not used before you make an offer on a property, it can easily be renewed once expired. Our team of dedicated mortgage advisors can usually get one of these turned around for you within 24 hours of your first appointment.
Fourth Step: Finding the Right Solicitor
After you have gotten your Agreement in Principle, you will need to look at finding yourself a Conveyancing Solicitor (also known simply as a Conveyancer) to provide assistance to you with the legal proceedings of the homebuying process. The term Conveyancing is used to describe process of transferring legal ownership of a property between parties, for both the buyer or seller.
Your Conveyancing Solicitor will be able to handle contracts, provide you with any legal advice that you may need, conduct local council/authority searches, help sort things out with Land Registry and lastly process the transfer of the funds that you have acquired in order to pay for your new home. You must choose carefully as this is a very important part of your process.
It’s also key to remember that Licensed Conveyancers are property specialists and therefore cannot deal with complex legal issues, whereas more general Solicitors offer a full range of services so can often seem more costly. Whilst we do not offer these services ourselves in-house, we have collated an internal list of companies we trust, that your dedicated Mortgage Advisor in Doncaster is able to refer you to.
Fifth Step: Making an Offer on a Property
Now you’ve taken that step of getting in touch with a Mortgage Broker in Doncaster, passed the Mortgage Affordability Assessment, gotten yourself an Agreement in Principle and found yourself a Conveyancing Solicitor to deal with the legal element. You’re halfway through the process now and your next course of action is to make an offer on a property that you have your eye and heart on.
As touched upon earlier in this informational guide, by having an Agreement in Principle you will be in a much better place to negotiate on price with the seller. You have to find the balance of going low, but not to low as to offend the seller and create tensions, whilst still asking for a lower price. The seller will be more likely to sell to you than someone who is willing to pay the asking price but is unprepared, if you have an Agreement in Principle with you.
The worst-case scenario is that the seller will not accept your offer, but it’s at that point you can work out a more reasonable offer for both of you or walk away and find somewhere else that you’d like to live. Once your offer has been accepted, it’s back to your mortgage advisor and onto the last steps of your mortgage journey.
Sixth Step: Submit Your Documents
Now heading back to the mortgage side of things and a cardinal next step; you need to submit the required documents. As can probably be expected when such a large amount of money is involved, a mortgage lender will not just lend to any person.
Your lender will in fact need you to provide various documentation to prove that you are who you say you are, the income you earn from your job, where you are currently living and how well you conduct your finances. If you’re obtaining a joint mortgage, this documentation will be required from both parties individually.
The documents you will need to submit to the lender, include; proof of ID, proof of address, the last 3 months’ pay slips and latest P60 (employed), the last 3 years’ proof of earnings and Tax Year Overviews (self-employed in Doncaster), proof of any other income like state benefits or maintenance, proof of deposit and the last 90 days worth of your bank statements.
Seventh Step: We’ll Progress Your Mortgage Application
With your mortgage agreed in principle, and your offer accepted, we are now able to go forth and submit your full mortgage application. With all the things you needed to prepare now ready and checked by your dedicated Mortgage Advisor in Doncaster & their hard working team of Mortgage Administrators, we are ready to submit an application to the lender for your future mortgage.
Your advisor will send off all the collected documentation you have provided for evidence in order to achieve this, and then it’s just a matter of waiting for them to respond with whether or not your mortgage application has been accepted or declined. Whilst there is no specific time frame in which this can come back, our Mortgage Administration team will be able to chase the lender to find out the answer on your behalf.
Eighth Step: Property Valuation/Survey
In-between your mortgage application and being offered a mortgage, the lender will require your property to have a valuation survey. These surveys are usually carried out by accredited companies nominated by the lender, as they will have a list of companies they trust.
The purpose of such a task is to understand how much a property is truly worth, against what you’ve agreed to pay for it. If you’re paying above its actual market value, it’s more likely that the lender will not want to lend you the funds you wish to borrow, as in the event of arrears, they will most likely be out of pocket and unable to make back the full borrowed amount. This is something that is known as a ‘Down Valuation’.
There are various types available when it comes to surveys, with different prices for each of these. Some will just want to check the properties worth, whereas some will also give you any necessary information on any structural concerns as well as possible repairs that may need your attention in the future. Your Mortgage Advisor in Doncaster will be able to help you find the right survey for you and your property.
Ninth Step: Receiving Your Mortgage Offer
Almost there now, as finally, we’re reaching the moment you’ve been waiting for. Once your lender has analysed your case and assessed all the evidencing documentation, you will be presented with your Mortgage Offer.
With this point now upon us, our team of friendly Mortgage Advisors and Administrators in Doncaster, that you’ve become friendly with over the course of your process, will be able to review the offer for you to ensure everything is correct and suitable for you. Once your mortgage offer has been received, it’s then down to your Conveyancing Solicitor to take your purchase from your offer, through to completion.
Tenth Step: Completing The Process
Congratulations, you have now officially transitioned from First-Time Buyer in Doncaster to a First-Time Homeowner in Doncaster. With any prior anxieties now firmly in the rear view mirror, we hope you’re happy and ready to begin your new life, in that new home you are the proud new owner of.
The final little steps are simply to go get the keys and move in! We hope you had a a fast & friendly Mortgage Advice service in Doncaster with our dedicated team. If you have chosen a fixed rate mortgage, at the end of your term, we will get in touch with you once again to offer our assistance with your Remortgage!
Doncastermoneyman Spring Budget Update 2021
Rishi Sunak’s second Budget as Chancellor brought two pieces of welcome news for the property sector as the Government attempts to transform “Generation Rent” into “Generation Buy” to help stimulate the UK economy, namely the new 95% Mortgage Guarantee and an extension of the Stamp Duty Holiday.
95% Mortgage Guarantee
The name of this scheme is misleading as not everyone that applies is guaranteed to be offered a mortgage, it is still subject to affordability and credit score. The “guarantee” itself is that the Government will ensure Lenders don’t stand a loss if they grant a 95% mortgage to a customer who then subsequently falls into arrears and is repossessed leaving behind negative equity.
This scheme should in theory give Lenders more confidence to lend even though the applicant only has a smaller deposit to put down. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements!
The scheme is available to both 1st Time Buyers and Home Movers, it’s available on any property (not just new build) and will run until December 2022. Some major High Street Banks have already signed up to the scheme and it’s likely more will follow later on. It’s still a big challenge for Lenders to cope with the demand they are getting for mortgages due to the difficulties training and supervising staff working from home but they will want to offer as many of these mortgages as they can.
Stamp Duty Holiday Extension
When the Stamp Duty Holiday was launched last year we all hoped life would be very much back to normal by the cut-off date of 31st March 2021 but things didn’t pan out that way as we know. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the object of the exercise.
Therefore it was good to hear the scheme has been extended to 30th June for purchases up to £500,000 and 30th September for purchases up to £250,000.
The Government certainly sees the property sector as an area that can play a big part in our economic recovery and if you are looking to buy a home or remortgage this year please reach out and we will be happy to advise you.
Mortgage Advice in Doncaster | Mortgage Payment Holidays
At the beginning of the Coronavirus pandemic, the Government made a promise that all borrowers would be allowed a three-month mortgage payment holiday if deemed necessary. Most lenders followed along with the Government’s guidelines and did what they could to help their borrowers during what was a difficult few months.
We felt it appropriate to write a summary of what mortgage payment holidays are, what lenders are doing and who will be able to provide help and guidance through these next few months.
We feel that it is best to summarise what mortgage payment holidays are, what lenders are doing, and who can provide you with help and guidance through these next few months.
What is a Mortgage Payment Holiday?
Mortgage payment holidays are an agreement entered into with your bank, building society or mortgage lender to defer your monthly mortgage payments for a set period. In this case, 3-months.
It does not mean you never have to pay the amount back, but the interest you defer is added back onto the loan amount, while your capital balance will not decrease. In other words, your mortgage amount will increase slightly, and you will continue to attract interest on the whole amount.
When you are ready to continue the payments, this could mean that either your monthly payments are recalculated at a slightly higher level, or your mortgage term is increased somewhat. Most lenders will probably prefer not to extend your mortgage term as this could take you past their standard retirement ages, but the detail on this will follow in due course.
Dependent on your mortgage deal, you may be able to pay off a lump sum later in the year to bring your mortgage back to where it would have been.
Mortgage Payment Holidays are available both for those with residential or buy-to-let mortgages, which means landlords also have assistance if rental payments are affected.
What is the Government Proposal?
The full proposal is in detail below:
• Mortgage lenders will offer an automatic 3-month mortgage payment holiday for customers impacted, directly or indirectly, by COVID-19.
• The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that COVID-19 impacts them.
• This means that lenders will not complete an income and expenditure assessment, or evaluation of alternate payment options as ordinarily required under MCOB.
• This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where COVID-19 also impacts the operation of collections teams made.
• Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future.
• Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.
Mortgage Payment Holidays | How do I apply?
We would recommend speaking to your Mortgage Advisor in Doncaster. They will asses your financial situation first before looking to defer your payments as your situation may not yet be pressing.
Approaching a Mortgage Broker in Doncaster like us will allow you to explore all of your current mortgage options and could make things feel a lot less stressful.
For a customer, up to date with payments, not in arrears and impacted by COVID-19:
• The customer would contact the lender and inform them that they are affected by COVID-19.
• The lender would accept these details from the customer and offer an automatic 3-month mortgage payment holiday.
• no evidence will be sought from the customer.
• The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances.
• At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, while ensuring that the mortgage remains affordable and sustainable.
• The lender notifies the customer that if they wished to complete a full assessment now, there might be other forbearance options more suitable to the customer.
Mortgage Payment Holidays | What does this mean for my Credit Score?
In some cases, a mortgage payment holiday can have a negative impact on your credit score, but most lenders have now said that for cases linked to the virus, they will ensure that this is not the case.
You must ask this question to your lender directly and record the response, including the date and the name of the person you are speaking to avoid confusion later. Different lenders are doing different things.
Will I still be able to remortgage or take a Product Transfer with my lender?
At first, everything seemed like it would remain exactly the same and you would still be able to make changes to your mortgages as normal. This has changed in the last couple of days and lenders have been asking borrowers to avoid making changes whilst you are within a mortgage holiday period. So, at the moment they are not allowing mortgages and product transfers.
Borrowers nearing the end of their existing product may be forced to move on to the higher lenders variable rate. This could mean that borrowers who act too early could find themselves on a mortgage payment holiday that accrues interest on a costly variable rate.
We would highly recommend speaking to your Mortgage Advisor in Doncaster they will determine the best course of action based on your personal and financial situation. If possible, arranging your mortgage transfer first then asking for the holiday would seem to be the most sensible way forward.
My Mortgage got Offered Will my Lender Withdraw the Offer?
At the moment, no Lenders have withdrawn mortgage offers; in fact, some are extending offers past the standard six-month expiration date.
Should I Pull out of my Purchase?
You should not pull out of your purchase unless, for example, you are worried about losing your job as a result of Coronavirus. We are advising everyone to proceed as usual for now and “wait and see” – you are not committed to completing your purchase until contracts get exchanged.
What “Other Options” are available?
In some cases, lenders can offer you a temporary switch to interest-only in order to reduce your monthly payments but not to add any further to the loan amount by still servicing the interest payments each month.
It may not be necessary to convert all your mortgage to interest only, and it may be that putting part of the mortgage on this basis could give you the breathing space you need.
People with savings may find that remortgaging onto an offset basis could give them a helping boost they were looking for, they will be cutting down on their monthly payments whilst keeping hold of their savings.
For example, someone with a £400,000 loan and £100,000 in savings would only pay interest on £300,000. This will massively reduce their monthly mortgage payments.
For others, a straight remortgage to another lender, calculating the cost of any early repayment charges, may well be enough to ease the burden or simply extending the term of your mortgage.
If you still have any other questions on mortgage payment holidays or just want general Mortgage Advice in Doncaster, give us a call today. We want to help you and your mortgage journey through these tough few months ahead. Speak to an experienced Mortgage Advisor in Doncaster today.
