TOP 3 tips to consider when looking to buy your first home

TOP 3 tips to consider when looking to buy your first home

This blog comes from an interview with Dan Rowden a few weeks ago

1) Firstly, you want to get a feel for your credit score and your credit history as it stands. The best way to do this currently is to use someone like Equifax or Experian, who are arguably the market leaders, to download a copy of your credit report. Also, you could look at quite a few different free providers that are available these days for checking your credit. For example, TransUnion, ClearScore, Credit Karma (any of those would allow you to see what credit you’ve got currently, what you’ve had, how it’s being managed, and also what your credit score is). This is important to pretty much all lenders. Some lenders are more flexible than others when it comes to correct credit history. But it’s important for us as a broker to get a feel for this, because it really does help us know which direction to go for in terms of the best rates, which lenders to go for, etc. This is a really good things to start with. If you’re still perhaps a little way off from buying, it gives you a good benchmark for where your credit is currently and what you might need to do to improve it. (Ways to improve it would be getting on the electoral role and making sure that your address for the credit file of your current address is correct, especially if you’ve moved around a lot. Also basically just paying things on time. Obviously it goes without saying that well managed credit will help build your score.)

2) Secondly, get as much deposit as you possibly can. This is obviously easier said than done. Deposit can come from the bank of mum and dad, it can come from your own savings, a help to buy ISA, a lifetime ISA, whatever it might be, lenders are pretty flexible with that. In the current market, here we are in September 2020, the amount of deposit that you have is arguably more important than perhaps ever before. Pre-COVID a 5% deposit or a 10% deposit was very common. Currently you’re looking really at a 10% deposit as a minimum and even then options are reduced. So to get most choice, you really need a 15% deposit at the moment. I just want to stress that it’s not impossible to get a mortgage with a five or 10%, but it’s just more tricky because of COVID. So get saving those pennies. That’s really helping currently.

3) Thirdly, and finally, gather together all the documents that a broker like ourselves or your bank is likely to need in order to research the market accurately. The main one here is your proof of income. So if you’re employed, the last three payslips is typically required. Sometimes your last P60 as well. If you’ve just started a new job, you’re a job contract. If you are self-employed, either two years accounts or tax calculations to show your salary and dividends (that’s crucial obviously, because we need to see what’s coming in). Also any other income that might be declared outside. For example, any tax credits or any other income from maintenance or something. Anything along those lines, we need to see proof of it. The same applies with outgoings. We’ll need to get an idea of commitments that you have in place. Obviously there’ll be no mortgages if you’re buying your first home. But do you have a credit card with a balance on? Do you have a car loan with a high purchase? Do you have a personal loan, etc? Very important to get all the ins and all the outs so we can see what your disposable income is. That’s the key stuff. And then usually we’ll need to see the last three months bank statements to show your income going in, proof of ID and proof of residency.

So if you gather all those together, it means that alongside getting your deposit and a good feel for your credit, you’re armed then with the information that we need as a broker to find your best option as quickly and as efficiently as possible.

Hope that helps. Take care.

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