First Time Buyers




In the mid-90s, you only had to contact a mortgage lenders for them to award you a mortgage deal. You could borrow how much you required, sometimes shockingly even more than the home you were buying was worth. Time and the credit crunch have changed things radically. These days numerous struggle to get mortgages, so much so the Government has even launched a range of schemes such as Help to Buy to try to push lenders to offer more. So the starting point for first timers is no longer about choosing the mortgage that’s right for them. It’s about ensuring you’ll be chosen for a loan by a mortgage company at a rate that is affordable for you.



Historically, lenders simply multiplied your wages to work out how much to offer you. A single person could borrow four times their single salary while a couple would be given four times their joint salary. Lenders look at your income compared to your outgoings and work out how much spare cash you have each month. They’ll also factor in all your credit card and loan repayments. Even once they’ve done the maths, they’ll want you to have a cushion in case mortgage rates rise, and to ensure you’re not right on the edge of your finances. As a result, mortgage lenders will ‘stress test’ you on a higher mortgage rate, typically 6-7%, to check if you could still afford to repay.

Credit Score


Lenders are now much more selective — if your score is poor, almost all will reject you. The lender’s aim is to ensure you’re a profitable customer and can make your repayments. It does this by credit scoring you, to try to predict your future behaviour based on your past.If you have a poor credit score, it takes time to rebuild it. Perversely, one way to do it is to get a credit card and spend on it each month. This proves to lenders you can borrow responsibly. Yet only do this if you ALWAYS repay in full to avoid interest. Put about £50 on it each month, clear it each month for a year, and it should help.

How to get a Mortgage


You need a property before an official mortgage application. Lenders rely on the property you buy as security if you later can’t afford to pay. Mortgage in principle is a conditional offer saying you may be accepted, based on a quick check of your income and, possibly, your credit file. In the property market, you’re highly likely to be asked for one by a vendor before they will accept an offer. In addition, for first-time buyers, it boosts confidence that they’ll be accepted.



The deposit is the amount you put towards the cost of purchasing your property. The deposit not only proves that you’re solvent and have financial discipline, but it also means the mortgage loan is less of a risk for the mortgage company. To get the full choice of deals having a decent deposit amount is important. 40% is generally the optimum deposit, giving you some of the best rates that mortgage lenders will offer.

Paperwork required


Yet getting your first mortgage — or even your second or third — is not the end of the story. Your circumstances may change — the deals available will certainly not stay the same. It’s important to keep your eye on the ball — especially if you’ve chosen a deal which runs for a set period of time. Make sure that once you’ve tracked down the best deal, you take it.

  • SA302 tax return forms, mainly for the self-employed. These are copies of your self-assessment tax return, which lenders may want to see. These can take weeks to get from HMRC so be prepared well in advance.

  • Proof of deposit (plus written confirmation from donor — typically parents — if getting a gift towards the deposit that it really is a gift & not a loan).

  • Proof of income (often last three months’ pay slips or 2/3 years’ accounts if self-employed).

  • Your latest P60 tax form (showing your income and tax paid from each tax year).

  • Your last three months’ bank statements.

  • Proof of bonuses/commission.




Remortgaging means shifting your mortgage from one lender to another to get yourself a better deal. You don’t have to move house to do it. There are many reasons why remortgaging could make sense for you but the main one is simple. Saving money. Big money. For most people, their mortgage is their biggest financial commitment, it follows that streamlining the largest debt can produce the largest saving. For some, sticking on the standard variable rate — the rate you end up paying after any introductory deal has ended — is the best option, a previously unthinkable scenario. If you’re considering this, ensure remaining on that rate is an active choice rather than a lazy one, as otherwise, you may find you’ve missed out on a fortune.

Getting the best deal

Ideally you’ll start your search around 14 weeks before you want to remortgage, but don’t panic if you’re needing to do it much later. The actual remortgage process can be really quick, but assume somewhere between six to nine weeks. The suggested starting earlier because some lenders allow you to apply and hold the rate for three to six months before you have to complete. The cutting-edge technique is to find the top mortgage that can be held for three months and apply for that, then search the market again one month before to see if there are better rates. If there are, then by all means apply to the new lender (just don’t tell the original lender until you’ve secured a formal offer… or you could end up with neither).

Reasons to remortgage


You’ve had a pay rise or maybe you’ve inherited some money. You want to make extra payments to your mortgage but your current deal won’t let you, or it will only let you make a small overpayment. Whatever flexibility you want in a mortgage, chances are it’s out there. But remember lenders don’t offer this for free. Expect to pay for flexible features with a slightly higher interest rate. So don’t be tempted to go for bells and whistles unless you’ll actually use them.

Millions of people in the UK were sold endowment mortgages in in the ‘80s and ‘90s. Since then, nearly all of them have been told to expect a shortfall on their endowment. With an endowment mortgage, your monthly payment does two things. Some of the money goes to your lender to cover the interest on your loan. The rest is paid to an insurance company which invests it on your behalf. What you’re not doing is paying off any of the capital you owe.

Reasons not to remortgage


Despite the potential savings available, there are some people who probably shouldn’t remortgage. It’s all a question of money, timing and your personal circumstances. Essentially you have to decide whether the savings available at the point you’re considering switching deals will outweigh the cost.

If you own less than 10% of your property outright — or to put it another way, you need to borrow more than 90% of the current value of your property — then you’ll often find it difficult to get a good new mortgage deal. While 95% mortgages are increasingly more available, especially since the Government’s Help to Buy scheme was introduced, the rates aren’t that competitive. So unless you’re on a very high rate deal now, you’ll really need to get below the 90% threshold to save.

Alternatively, you may be on a poor deal, but the lender has locked you in with such a horrendous early repayment charge that it’d be utter foolishness to move before the end of the incentive period.In recent years mortgage rates have plummeted to their cheapest ever. But rates can move in relation to the Bank of England’s base rate, what’s going on in the international money markets and lenders’ own competitive priorities.