Find property first or mortgage?

stevesmithanon

What is the generally agreed way of buying, do you find a property and then go see if you can get the loan, or see a broker first and only then go find a property?

Thanks,

Steve

kingstreet

Establish how much you can borrow using online calculators.

Obtain all three versions of credit file, to ensure nothing nasty awaits.

Equifax

https://www.econsumer.equifax.co.uk/consumer/uk/order.ehtml?prod_cd=UKSCR

Experian

http://www.experian.co.uk/consumer/statutory-report.html#orderReport

CallCredit

https://www.callcredit.co.uk/stat-report-online/index.php?action=basket_add&tpl=setRegister&package=63&amount=1&mode=clear

No pointless subscription services, or "scores" which will mean nothing.

See a specialist and perhaps get an agreement in principle.

Find a property, agree purchase price.

Instruct solicitor, apply for mortgage.

stevesmithanon

Well, I contacted the Which mortgage service today. I am self employed and only my last years accounts justify a mortgage size that I want to borrow.

The advisor said for me to find a property, put an offer on and then come to them to see if I can borrow the money or not. To me that seems a bit back to front. What is the point in finding a property and then seeing how much I can borrow?

kingstreet

Services like Which and L&C don't want to invest time and effort at the early stages because there's a good chance you'll get picked off by the selling agent, or other provider, during the offer process.

Those of us who offer a more personal service tend to do it as I spelled it out in my response. It minimises wasted effort/time by ensuring the mortgage is only placed when any issues have been identified and resolved and once you have the certainty of a maximum purchase price which can be based on affordability, deposit and income.

If you have progressively increasing income, there are lenders which will use only your latest year's income, rather than an average. A decent broker will put this together for you as quickly as you need.

stevesmithanon

Thanks for your detailed replies. Should I get the £2 very basic credit reports? Doesn't accessing your credit report go against you, as searches are viewed as potential borrowing activity? I know there used to be something like this but I know times change.

I understand the broker doesn't want to waste their time. I used to be a mortgage broker 20 years ago, using Mortgage Brain software. People used to pick your brain and go elsewhere. But its a bit Catch-22.

I think the term "agreement in principle" struck a chord. To me it seems futile searching for a £220K property, putting an offer on it and going to a lender who then says you can borrow £180K.

To get a bit more specific, my last 3 years self employed earnings have been:

2011: £9K
2012: £25K
2013: £50K

I have a deposit of £37K.

The Which broker said I could possibly borrow up to 3.6 x the £50K, although he was quite vague on this. He also said there is probably only a couple of lenders on the market who would touch it.

Yorkie1

stevesmithanon wrote: »

Thanks for your detailed replies. Should I get the £2 very basic credit reports?

Yes

Doesn't accessing your credit report go against you, as searches are viewed as potential borrowing activity?

You're not doing a credit search but merely accessing the data they already hold about you. It won't affect you.

I know there used to be something like this but I know times change.

See above.

Dave_Ham

King street sums up the big players perfectly..

Which rep is talking rubbish, decent broker gets you 4-5 times most recent year on reasonable term net dependents and commitments with good credit file..

Good luck

stevesmithanon

That gives me hope. I've signed up for the 3 credit reports and there is nothing adverse showing on the one report I currently have access to.

I have no debts, no loans.

Now, I'm wondering if a £35K deposit on a £220K property would still be feasible and what kind of interest rate I would incur. Due to my circumstances, is it likely to be punitive?

kingstreet

At 85%, you should be expecting rates around the 4% mark.

You won't be penalised, you'll just have fewer lenders willing to lend to you.

stevesmithanon

4% sounds good! Is that like a discounted rate for a couple of years or something? Do they want bank statements or something from this year, or are the last 3 years accounts ok, even if they are rising?

kingstreet

Appoint a whole market broker to find the right lender for you and they will advise you of the product options and documentation requirements.