First time mortgage advice
Options
JeffMason
Posts: 354 Forumite
Hi Everyone,
I'm looking to get a mortgage for the first time and am nervous about the whole process.
I think a fixed rate for at 2-4 years is the best bet. I might have to move after that so any longer would be problematic unless I can get something that allows 'porting' but I've not seen any mention of that outside of the MSE guide.
I am looking in London and have a large deposit, and the amount I want to borrow fits nicely into what my income allows. Although I'm not sure if it's better to get as much mortgage as I can and put in less of a diposit or keep the mortgage as low as I can manage.
I've looked at best buys and wanted to start looking into Mortgage in Principle options. I've not found a property yet, and the specifics of price ranges I can look in depends a lot on how much I can actually borrow. I don't want to look at houses I can't afford so thought getting an MIP first was the best idea.
MSE suggests not going direct to a lender, but which broker option is the best bet? It offers 'London & Country' or finding a local face-to-face broker. Is face-to-face the best option or is 'London & Country worth trying? I'm not sure the difference between them or advantages of face to face and would be grateful for any advice.
I'm sure I'll have many more questions as this process continues. It's all quite nerve wracking and I don't want to make a mistake that I am stuck with...
Thank you.
I'm looking to get a mortgage for the first time and am nervous about the whole process.
I think a fixed rate for at 2-4 years is the best bet. I might have to move after that so any longer would be problematic unless I can get something that allows 'porting' but I've not seen any mention of that outside of the MSE guide.
I am looking in London and have a large deposit, and the amount I want to borrow fits nicely into what my income allows. Although I'm not sure if it's better to get as much mortgage as I can and put in less of a diposit or keep the mortgage as low as I can manage.
I've looked at best buys and wanted to start looking into Mortgage in Principle options. I've not found a property yet, and the specifics of price ranges I can look in depends a lot on how much I can actually borrow. I don't want to look at houses I can't afford so thought getting an MIP first was the best idea.
MSE suggests not going direct to a lender, but which broker option is the best bet? It offers 'London & Country' or finding a local face-to-face broker. Is face-to-face the best option or is 'London & Country worth trying? I'm not sure the difference between them or advantages of face to face and would be grateful for any advice.
I'm sure I'll have many more questions as this process continues. It's all quite nerve wracking and I don't want to make a mistake that I am stuck with...
Thank you.
0
Comments
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Most "normal" mortgages allow porting, but they are subject to underwriting at the time.
In terms of which type of broker, L&C are a call centre. You are going to be a number, economies of scale, they need to see a lot of customers to pay the bills. If that works for you, then you avoid paying any fees.
If you see a local broker, it does not need to be face to face as such. We are a local broker but we have customers from Brighton to Scotland, I have a customer who lives on the next road to where I live and I have never met him. It just tends to be if you speak to a smaller firm you will get a more personal service, but generally speaking smaller local firms charge a fee.
A lot depends on what you want, if you want someone on hand to reassure you, someone who has 10 years experience, someone who will get on to a problem straight away you are probably better with a local firm. If you are not interested in that, you will be fine with L&C.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Most "normal" mortgages allow porting, but they are subject to underwriting at the time.
In terms of which type of broker, L&C are a call centre. You are going to be a number, economies of scale, they need to see a lot of customers to pay the bills. If that works for you, then you avoid paying any fees.
If you see a local broker, it does not need to be face to face as such. We are a local broker but we have customers from Brighton to Scotland, I have a customer who lives on the next road to where I live and I have never met him. It just tends to be if you speak to a smaller firm you will get a more personal service, but generally speaking smaller local firms charge a fee.
A lot depends on what you want, if you want someone on hand to reassure you, someone who has 10 years experience, someone who will get on to a problem straight away you are probably better with a local firm. If you are not interested in that, you will be fine with L&C.
Thanks for the reply. I don't think I quite know what I want or need at this point. That's part of the problem. Perhaps L&C would be fine, I don't know. You mention problems and I don't know what kind might come up or if I'd be able to deal with them. It's just all an unknown so any advice on which way to go is most helpful. And what I'm trying to clarify right now is how much I can borrow, as I don't want to start seriously looking until I know my budget.0 -
Most brokers will be happy to give you a ballpark figure of what you can borrow.
Alternatively all of the high street lenders have calculators on their websites that give you potential lending figures. If you enter your details in accurately, you will get a very realistic lending figure.
All lenders have different affordability calculators / models so try a few and take an average.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I reckon you should speak to an independent broker in a smaller form who cna give you the time you need. I'm saying that given you are open to how little you know about it all.
I do a lot of transactions on phone and email but if someone really needs to know how it all works face to face works best for me everytime.
I go through the whole home buying process, tell people about searches, indemnity policies, solicitors vs conveyancing firms, surveys, insurances, and finally the mortgage.
A lot of people leave feeling they are a lot more prepared for the whole process.
Being completely fair, all that can be done over the phone as well with a good broker, but it's not something London and country will bother with. They will get you a borrowing amount and send you on your way.0 -
Thanks all. Very helpful. I think talking to a broker is a good idea when it comes to actually get the mortgage, but do you think that is now? I'm just looking to find out how much I can actually borrow so I can start talking to estate agents and vewing properties.
Can I get mortgage in principle advice now and deal with the other details when I've found a property, or should I be doing all of that now?0 -
I generally prefer to avoid getting Agreements in principle until you are ready to proceed but sometimes we have no choice.
General rule or thumb is around 4.5x your income plus deposit as a purchase price. That assumes not too much debt (a little is fine), maybe 1 child and you are under 45(ish). But by all means call a broker, they can have a chat, get a few basics and give you an indication.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thanks for the reply. I don't think I quite know what I want or need at this point. That's part of the problem. Perhaps L&C would be fine, I don't know. You mention problems and I don't know what kind might come up or if I'd be able to deal with them. It's just all an unknown so any advice on which way to go is most helpful. And what I'm trying to clarify right now is how much I can borrow, as I don't want to start seriously looking until I know my budget.
Advice:
- First thing you might want to do is try this 'how much can I borrow' calculator - it won't give you an exact amount but it gives an idea of the type of range you might be looking at.
For me it said between £110k-£150k - around four-and-a-half times salary - it turns out I've been offered c.£144k and will only actually be needing around £98k, but it was good to have that initial idea.
- Then read this FTB guide.
- Then - if you've not already - register with the three credit reference agencies and have a look at your credit history for any mistakes or scary things that might put off a lender/cause complications - if there is anything on there then you can ask the clever people here if you need to look for a specialist broker or if you can be placed on the hightstreet by any 'decent' broker.
- https://www.clearscore.com
- https://clubs.moneysavingexpert.com/creditclub/register
- https://www.creditkarma.co.uk
- Finally - have a look on rightmove for the area(s) you want to live and see how much those houses go for - make a priority list of your must haves/identify dealbreakers and systematically work out the selling price of the cheapest/average houses sold in the last 12 months that actually meet all/most of those requirements.
I was looking at a specific geographic area and the sold prices on rightmove gave me a range of around £30k assuming I'd settle for something in the middle - if you're in the North it might be that a decent 'starter' house is £60k-£120k, in the South it could be £250-£300k and only you can know the market you're looking at.
Possibly helpful anecdote:
In the hopes that it'll be useful - I'm happy to share my experience as a FTB: The first conversation I had with by broker was something like:
- 'how does this whole house buying thing work?'
- 'what are your fees and what does that get me'?
- 'am I even in a position to buy/need a broker'/'what should I know before we start'?
Basically, the first step was for him to take some documents - proof of income, copy of credit report etc - and for me to give him an idea of the size of my deposit and the type of house I'm looking to buy/how much I'd need to borrow to buy in the area I'm looking at - I sent a rightmove link to a couple of houses I liked.
He had a look at the numbers/my circumstances and figured out if he could help - It was made clear it was at that point - if he thought I was placable with a lender and if I wanted to proceed - then I would be liable for the initial charge £100 for advice and to apply for an approval in principle; the conversations upto to that point were 'free'.
When I found a house and my offer was accepted - the stage I'm at now - I then had another conversation with the broker about submitting a full application.
He's currently in the process of putting together some numbers for me to consider - this bit is again 'free' - and I'll get an email with different rates, lengths of mortgages etc and an explanation of his recommendation given what I've said I would prefer and my specific circumstances - if I agree/approve one of the options, I'm then liable for another fee, in my case around £500 and he submits the application.
I'll need to provide some up-to-date paperwork, but other than that the broker handles the application and any back and forth - liaising directly with my solicitor and the sellers EA directly to arrange the valuation and similar as required.
Personally, given I've got enough stress figuring out how to move 170 miles with three cats... I think that's worth £600 to me, but your situation might be different.
HTH... and good luck
That sounds like a classic case of premature extrapolation.
House Bought July 2020 - 19 years 0 months remaining on term
Next Step: Bathroom renovation booked for January 2021
Goal: Keep the bigger picture in mind...0 -
As said try a few online lenders what can I borrow.
What's your deposit?
What's your gross?
Outgoings and debt dependants will adjust that.
What's your target properties likely to cost.
Actual mortgage size can be driven by the LTV if you have more than enough with the deposit and lending capacity
Borrow a bit more but stay within a LTV bracket to preserve cash till settled then overpay if you still have money left once you have fixed everything.
LTV can have a bigger impact on rates at the higher end over 75% which tend towards a shorter fix to go down band at first change
Then you have the full term that can make a significant difference on the monthly payment and in some cases can bring max lending on multiple into affordable range.
At the high multiple of 5 times on £40k net £2500pm
£200k 2.5%
25Y £900pm
40y £660pm
What are the reasons behind thinking you will need to move in 4
years.
Think carefully about a short term purchase.
Moving is expensive, in your £300-£400 bracket you will eat £10k+ with a move0 -
Advice:
- First thing you might want to do is try this 'how much can I borrow' calculator - it won't give you an exact amount but it gives an idea of the type of range you might be looking at.
For me it said between £110k-£150k - around four-and-a-half times salary - it turns out I've been offered c.£144k and will only actually be needing around £98k, but it was good to have that initial idea.
- Then read this FTB guide.
- Then - if you've not already - register with the three credit reference agencies and have a look at your credit history for any mistakes or scary things that might put off a lender/cause complications - if there is anything on there then you can ask the clever people here if you need to look for a specialist broker or if you can be placed on the hightstreet by any 'decent' broker.
- https://www.clearscore.com
- https://clubs.moneysavingexpert.com/creditclub/register
- https://www.creditkarma.co.uk
- Finally - have a look on rightmove for the area(s) you want to live and see how much those houses go for - make a priority list of your must haves/identify dealbreakers and systematically work out the selling price of the cheapest/average houses sold in the last 12 months that actually meet all/most of those requirements.
I was looking at a specific geographic area and the sold prices on rightmove gave me a range of around £30k assuming I'd settle for something in the middle - if you're in the North it might be that a decent 'starter' house is £60k-£120k, in the South it could be £250-£300k and only you can know the market you're looking at.
Possibly helpful anecdote:
In the hopes that it'll be useful - I'm happy to share my experience as a FTB: The first conversation I had with by broker was something like:
- 'how does this whole house buying thing work?'
- 'what are your fees and what does that get me'?
- 'am I even in a position to buy/need a broker'/'what should I know before we start'?
Basically, the first step was for him to take some documents - proof of income, copy of credit report etc - and for me to give him an idea of the size of my deposit and the type of house I'm looking to buy/how much I'd need to borrow to buy in the area I'm looking at - I sent a rightmove link to a couple of houses I liked.
He had a look at the numbers/my circumstances and figured out if he could help - It was made clear it was at that point - if he thought I was placable with a lender and if I wanted to proceed - then I would be liable for the initial charge £100 for advice and to apply for an approval in principle; the conversations upto to that point were 'free'.
When I found a house and my offer was accepted - the stage I'm at now - I then had another conversation with the broker about submitting a full application.
He's currently in the process of putting together some numbers for me to consider - this bit is again 'free' - and I'll get an email with different rates, lengths of mortgages etc and an explanation of his recommendation given what I've said I would prefer and my specific circumstances - if I agree/approve one of the options, I'm then liable for another fee, in my case around £500 and he submits the application.
I'll need to provide some up-to-date paperwork, but other than that the broker handles the application and any back and forth - liaising directly with my solicitor and the sellers EA directly to arrange the valuation and similar as required.
Personally, given I've got enough stress figuring out how to move 170 miles with three cats... I think that's worth £600 to me, but your situation might be different.
HTH... and good luck
Amazingly helpful. Thank you so much!0 -
getmore4less wrote: »As said try a few online lenders what can I borrow.
What's your deposit?
What's your gross?
Outgoings and debt dependants will adjust that.
What's your target properties likely to cost.
Actual mortgage size can be driven by the LTV if you have more than enough with the deposit and lending capacity
Borrow a bit more but stay within a LTV bracket to preserve cash till settled then overpay if you still have money left once you have fixed everything.
LTV can have a bigger impact on rates at the higher end over 75% which tend towards a shorter fix to go down band at first change
Then you have the full term that can make a significant difference on the monthly payment and in some cases can bring max lending on multiple into affordable range.
At the high multiple of 5 times on £40k net £2500pm
£200k 2.5%
25Y £900pm
40y £660pm
What are the reasons behind thinking you will need to move in 4
years.
Think carefully about a short term purchase.
Moving is expensive, in your £300-£400 bracket you will eat £10k+ with a move
Thanks! This is all very helpful!0
This discussion has been closed.
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