16 March 2018

Mortgaging a property - lets get practical (Part 2)

Our new home has been a great testament of answered prayer and God's faithfulness but to stand on victory ground there was a journey to be endured, faith to be tested and practical behind-the-scenes work that had to be done. 
Here is a recap of five principles I shared in Part 1 of my mortgaging a property series;
  • KNOW YOUR WHY - 'your why is what will sustain and determine your longevity'.
  • SACRIFICE LUXURIES - 'it creates breathing space in your finances and allows you to save more'. 
  • STAY IN YOUR LANE - 'don't let the greener grass on the other side waiver you, honour your journey.
  • GET INSPIRED - 'you may not know what you really want until you see it'.
  • IN ALL THINGS PRAY - 'if you don't do anything else, pray and have faith'.
All that said and done, lets get more practical, first things first,


Approximately six to nine months prior to you making a decision on buying a property it is important that you keep up-to-date with your bank account, incoming and outgoings, loans, credit cards etc. and to generally manage your available current credit (for example, always make sure that you have sufficient funds in your account for all your direct debits). When you apply for and take out credit a record of this is kept by Credit Reference Agencies in the form of a report. The report contains information about credit accounts, repayment history, address history and financial connections with other individuals/entities. Make sure your credit file is clear before applying for a mortgage. You can take a look at your report through either of the two; Experian {I would recommend you do this nine months prior to see if you have any non-conformances then resolve if you do} and/or Equifax {two months prior to see your report after you've cleared all non-conformances}. 


📷: thank you card wall in Suzanne's office, she's that brilliant!
APPRECIATION NOTE to my mortgage advisor,
a big massive THANK YOU for all your hard work. You excelled!
Approximately three months prior to buying a property I would say find yourself a mortgage consultant. The role of a mortgage consultant especially for first time buyers should never be underestimated - they will explain to you everything you need to know about mortgaging and protection. However, they do charge a non-refundable fee that costs between £500 and £1000 depending on the cost of the property you are looking to buy. The fees are split into two; for example, if your loan amount is less than £500,000 you will pay £500 in total for the Mortgage Arrangement Fee. £250 is paid when you start your mortgage application and the remaining £250 is paid when you complete your mortgage application.
Disclaimer: fees stated above are only for guidance purposes and are subject to change, visit your local letting agency or scout the internet for your nearest mortgage consultants.
What is the role of the mortgage advisor / consultant?
Mortgage consultants can help you find the home of your dreams, find you the right mortgage that suits your circumstances, help you with any legal work dealing with surveyors and solicitors and talk to you about protection. From personal experience, I found my mortgage advisor was most helpful in finding me a loan amount that was more than what the mortgage calculator had calculated (AIP), sassed out the market for the best mortgage product and last but not least, negotiated with underwriters on my behalf and generally gave advice throughout the whole process. 


From personal experience I would highly recommend that you leave this part to the mortgage consultant. Getting an AIP involves a credit check and as much as it may be tempting to do your own AIP application online, avoid this at all costs because too many attempts / getting numerous checks can adversely affect your credit score. For your own curiosity the least you can do is to only use a Mortgage Affordability Calculator.
What is an Agreement In Principle and what does it take into account?
Before applying for a mortgage and often before making an offer on a property, you will need a Lending Certificate / Mortgage in Principle / Decision in Principle / Agreement in Principle. This certificate confirms how much the lender is prepared to lend to you. It takes into account,

  • how much you can afford to borrow based on your income and outgoings.
  • details of your financial commitments, for example, loans and credit cards.
  • your credit score - sometimes no mark is left on your credit report.
  • address - your current address (+ any previous addresses).

When going to see your mortgage consultant for an AIP ask them what documents you need to bring in.


Now that you have your AIP in hand and you know how much the lender is prepared to lend you this in my experience helps you realistically narrow down your property search. Hopefully by this time you are high on inspiration from all the properties you would have been looking at and you are ready to make a decision on which home is best for you. Depending on what sort of property you are going for; new or old, apartment or house, different terms apply. For example, if you are looking to purchase an old house then you would make an offer and wait for it to be approved before starting the whole mortgage process. However, if you are buying a completely brand new property, you would choose a plot (subject to stage of build), pay a reservation fee and the home is yours at the price agreed.
I believe there is a lot more to share on purchasing a brand new house VS an old house that I would like to go into more detail on so please do join me again as I continue this series.
Thank you for your readership and I cannot wait to have you again!


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