Latest news with #firsttimebuyer
Daily Mail
7 days ago
- Business
- Daily Mail
How to get a mortgage: From applying for a decision in principle to getting an offer
Buying a new property, getting a mortgage and remortgaging are all huge financial decisions. They involve a number of different steps and a host of parties, including solicitors, estate agents and mortgage brokers. What's more, some of the steps are different depending on whether you're taking out a mortgage to purchase a property, or remortgaging and negotiating a new deal. This guide helps to demystify the process. From getting a mortgage in principle before searching for a property, to the documents you need when applying for a mortgage or remortgaging, we explain what you need to do. We also consider how to get a mortgage in various circumstances, including when you're a first-time buyer, are self-employed or are looking for a buy-to-let mortgage. It's always a good idea to compare mortgage rates to find out what deals may be available. Before you start your property search: Get a mortgage in principle If you are buying a home, the first step towards getting a mortgage usually involves applying for a mortgage in principle. This is also known as an agreement in principle or decision in principle, and it indicates how much a mortgage provider might be willing to lend you, based on information that you provide. You don't need to know the property you'd like to buy to get a mortgage in principle. In fact, doing this before ramping up your property search helps you narrow your focus on homes that you can afford to buy. It also shows you're serious about buying. But this won't be locked-in – even if the lender agrees to a mortgage in principle, there's no guarantee it'll actually offer you a mortgage when the time comes. You can apply for a mortgage in principle directly with many lenders online or in branch. Alternatively you can speak to a mortgage broker or adviser who should be able apply for a mortgage in principle for you. To get one you'll need to give the lender or mortgage broker your details including information about your income and outgoings. It should only involve a soft search of your credit file, which doesn't affect your credit score. This is Money's partner L&C can give you a free mortgage in principle. Enter your details and find out how much you could borrow in a matter of minutes. What if your mortgage in principle is declined? The lender might refuse your mortgage in principle for a few reasons, including if it thinks: you won't be able to afford the mortgage repayments you don't have a large enough deposit you have a poor or limited credit history Lenders look at your credit history to work out the risk of you not being able to repay the money. If you've struggled to meet your credit obligations in the past or are in significant debt, you'll probably find it difficult to get a mortgage in principle, and therefore a mortgage, from a mainstream lender. In this situation it's best to request a free credit report from the credit reference agency (or agencies) the lender used to check your credit file – the lender must tell you which it used when you ask. You can scour your report for areas to improve, for example registering on the electoral roll. You should also double-check the lender's criteria to make sure you meet them. If there's an element you fall short on, another lender may be more suited to your needs. New home: Once you have had an offer accepted, it is time for your full mortgage application Once you've found a property: Apply for a mortgage When you've found your ideal home and had an offer accepted, it's time to apply for a mortgage properly. If you're applying for a mortgage from the same lender that gave you a mortgage in principle, you should be able to retrieve the application and continue from there. There's no obligation to use the same lender that gave you a mortgage in principle. But if you do go with a different mortgage provider, it may ask you to complete a new mortgage in principle before you apply. What documents do I need for a mortgage? Knowing what documents the lender will ask for can speed up the mortgage application process. You should be prepared to show: photo ID such as your passport or full UK driving licence proof of residency or nationality if you've moved to the UK from a different country the last three to six months' worth of bank statements (the lender may want to check your regular outgoings) proof of income (such as payslips or your tax year overview if you're self-employed) evidence of your deposit (bank statements, or if your deposit's a gift you may need to fill in a form to prove you're not expected to pay it back) P60 tax statement Do you need a mortgage broker to apply for a mortgage? You don't need to use a mortgage broker when applying, but they can find the best mortgage deals for your situation and speed up the application process. While some brokers don't charge fees, others do. Make sure you understand fees before proceeding and compare a few different advisers before going ahead. If you have more specific needs, for example you're self-employed or have been turned down for credit in the past, a broker can help you find the best deal for your situation. The terms mortgage broker and mortgage adviser are often used interchangeably. They generally refer to the same type of service – someone who advises you on your options, including how much you can borrow, and searches the market for deals relevant to your situation. But make sure you know which type of adviser you're dealing with. Some advisers will only look for mortgages from a specific lender or group of lenders, or have a more restricted range of products they can recommend. These are often employed by the lender itself. Other advisers can search for the best deals from a wider range of providers. This is the type of adviser that's probably best to engage – look for brokers that describe themselves as independent or whole of market. What type of mortgage can you apply for? You can go for a fixed-rate mortgage, which fixes your interest for a set time, often two or five years. A variable mortgage on the other hand means that your interest can move up and down. Also consider fees and your options for the term – a longer term means your monthly payments will be lower, but you'll pay more interest overall. How long does it take to get a mortgage? It typically takes between two and six weeks for a lender to process your application and offer you a mortgage. But there are lots of factors that affect how long it takes to get a mortgage, including: Your preparedness: do you have all your documents together, such as your passport, bank statements and utility bills? Whether you're using a mortgage broker: mortgage brokers and advisers can make the application process quicker - but check whether they charge fees. The lender's checks: the lender needs to check your credit history in full, your affordability and whether the property is worth the amount you're buying it for. Whether the lender needs more information: the lender may ask for more documents or details before deciding on your application. The type of property involved: Some properties, such as leasehold flats, may require a longer mortgage process as the ownership structure is more complex Each mortgage application is different, which accounts for the wide variation in the time you can expect yours to take. How long does a mortgage offer last? A mortgage offer usually lasts for between three and six months. It depends on the lender so make sure you check. Once you've got an offer you can move on to the next stage of the process, which involves your solicitor carrying out legal checks on the property. Remortgaging: Switching to a new deal at the end of your fixed term Many people choose to fix their mortgage rate for a number of years, commonly two or five. When this comes to an end, they will need to switch to a new deal otherwise they'll fall onto the mortgage provider's more expensive standard variable rate. You can find a new deal with your existing lender, but you may be able to find a better one elsewhere so it's important to compare all your options. Switching to a new deal with your existing lender is called a product transfer, while going with a new provider means remortgaging fully. This involves many of the same steps as taking out a mortgage initially, including affordability checks and property valuation. How to find the best mortgage rates To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's online Mortgage Finder will search 1,000's of deals from more than 90 different lenders to discover the best one for you. You can get a free mortgage in principle, find out how much you can borrow and see which rates you might qualify for. > Find your best mortgage deal with This is Money and L&C Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage. Getting a mortgage in different situations: First-time buyers, home movers and more Here's an overview of getting a mortgage in different circumstances. A great way to find your best deal is by comparing mortgages. How to get a mortgage as a first-time buyer First time buyers can find it difficult to save for a deposit and their options are often restricted by what lenders are willing to let them borrow. First time buyers should look at these options when getting a mortgage: Lifetime Isa: this helps you save for a deposit quicker. You can put up to £4,000 a year into the account and the Government tops your contributions up by 25 per cent. Keep in mind you can only use the money to buy your first home or for retirement – you'll pay a penalty when withdrawing for other reasons. You will also pay a penalty if you use it to buy a home that costs more than £450,000. You can only open an account if you're under 40 and you must hold it for at least 12 months before you can use the funds to buy a home. Low-deposit mortgages: typically first time buyers need a deposit of at least 10 per cent but some providers now offer 5 per cent deposit mortgages. Products like this usually have higher interest rates and there's risk involved with borrowing a larger amount – for example, the value of your property could drop below the value of your mortgage. This puts you in negative equity, meaning your property would be worth less than what you owe. > What you need to know about getting a mortgage as a first time buyer How to get a mortgage as a home mover Your options are more complicated when you're moving home. You can sometimes choose to 'port' your existing mortgage to a new property. This allows you to keep your current deal, but not all mortgages can be transferred like this. Your available options will depend on whether your new home is cheaper or more expensive than your current one. For example, lenders can be reluctant to port a mortgage if you need to borrow more when upsizing. Otherwise, you can settle your existing mortgage and take out a new one. This can be beneficial if there are more competitive mortgage deals available, but you should take early repayment charges into account. These are likely to be due when exiting your current mortgage before the end of the term. > Can you afford a bigger home? What upsizers need to know How to get a mortgage when self-employed The self-employed need to give mortgage providers more proof of their income than employed workers, who usually just need to provide their last three payslips. In addition to documents such as your photo ID, utility bills, evidence of deposit and bank statements, the self-employed should be prepared to give: certified accounts of two or more years from a qualified accountant form SA302 from your tax return documents that support the information about your income in form SA302 These requirements can make it more difficult for the self-employed to get a mortgage, especially those who are newly self-employed. But the mortgage application process is the same whether you're employed or self-employed. There aren't specific self-employed residential mortgages for those who run their own business. A mortgage adviser can talk to you in more detail about getting a mortgage as a self-employed person. How to get a buy-to-let mortgage Buy-to-let mortgages are different products to residential mortgages and so have different requirements and application processes. They're usually interest-only, so throughout the length of the mortgage you only make interest payments before repaying the loan in full at the end of the term. To get a buy-to-let mortgage you'll often need to: have a deposit of at least 25 per cent of the property value show how much rental income the property can receive (usually lenders want to see it can earn at least 125 per cent of what you pay on your mortgage each year) own a property already give evidence of earnings outside of rental income be under the maximum age requirement (for many lenders this is 75) If you're interested in a buy-to-let mortgage, the rules can be complicated, so it helps to have an adviser explain everything for you. > How to invest in buy-to-let property – and other buy-to-let tips
Irish Times
7 days ago
- Business
- Irish Times
Average mortgage approval value hit new record of €319k in April
Average Irish mortgage approval values rose to a record of more than €319,000 in April, new figures from the banking industry reveal, as house prices continued to climb, requiring property owners to take on higher levels of debt. The Banking & Payments Federation Ireland (BPFI) said on Friday that lenders approved 4,705 home loans in the month, an increase of 4.7 per cent from March and 5.8 per cent from the same month last year. The total value of mortgage approvals in the Republic was €1.5 billion, a sharp 13.6 per cent higher than April 2024, the banking lobby group said. It meant that the average value of a mortgage approved in the month was €319,143, the highest monthly level since the BPFI's records began in 2011. READ MORE The average value of a first-time-buyer mortgage approved in April also hit a record €330,123, up by more than 8 per cent over 12 months. First-time buyers accounted for €965 million of the total value of mortgages approved in April, or 61 per cent. [ Could Ireland's new mortgage offerings save you a lot of money? Opens in new window ] 'We can see from today's figures that lenders are supporting more and more first-time buyers, which points to a healthy pipeline for lending in the coming months,' said BPFI chief executive Brian Hayes. 'However, first-time buyer housing demand is also growing, as evidenced by the 14,554 applications for Help to Buy in the first three months of 2025. This is up from 9,991 in the same period of 2024.' House prices in Ireland grew at an average annual rate of 7.5 per cent in March, according to the most recent Central Statistics Office figures, as continuing supply shortages, Government incentives to buy, and expectations of further interest rate cuts continued to fuel demand. The median or middle price paid for a home in the 12 months to March was €362,500. Property prices nationally have increased by 161.6 per cent from their trough in early 2013. Meanwhile, amid a shortage of second-hand properties for sale, the BPFI said mover-purchase mortgage approvals fell by 5.9 per cent in the 12 months to the end of April but were up 0.7 per cent in value terms. BPFI figures published in April revealed that the average value of mortgage drawdowns also hit a record of almost €328,000 in the first three months of the year amid soaring demand and low levels of supply. This was driven by a 9.6 per cent annual rise in loans on second-hand properties to €370,790. The Government is targeting the delivery of 303,000 new homes by 2030, starting with 41,000 homes this year and rising incrementally to 60,000 homes a year by 2030. However, the Central Bank, the Economic and Social Research Institute (ESRI) and other bodies are forecasting supply to fall well short of those targets this year and next.
ABC News
24-05-2025
- Business
- ABC News
Why first-home buyer FOMO is set to go into overdrive: and it's not just about the rate cut
Jason Martin has been searching since November for an apartment in the northern suburbs of Sydney near his daughter's school. He wants a two-bedroom place in Epping, but with many exceeding his $800,000 budget, he knows he'll need to compromise. This might mean choosing a property with building defects or opting for a one-bedroom apartment with a study area that fits a bed. But he's struggling to find something he really likes in his price range. "I always thought I'd buy something that I'd fallen in love with. But I haven't found anything worth fighting for," he told the ABC. The Reserve Bank of Australia (RBA) has cut the cash rate again, bringing it down to 3.85 per cent — the lowest in two years — with future rate cuts on the cards. Lower interest rates enhance buyers' borrowing capacity, spark buyer activity, fuel competition, and drive up home prices, which are already at record highs. In April, Australia's median home price reached a new record of $805,000, according to PropTrack. Mr Martin is aware his mission has become harder. "Interest rate cuts benefit existing mortgage holders, but for first-time buyers, they raise property prices. The last RBA rate cut seemed to increase some prices by $40,000." Broker Alya Manji from Aussie Home Loans Hurstville said there's roughly "an eight-week window" to buy after a rate cut before its effects hit the market. "If you don't act within that time, it gets tougher," she said. She said a 0.25 per cent rate cut could increase someone's borrowing power by $10,000 to $25,000 on a $500,000 loan. But at the same time, house prices could move by that same amount or more. Nicola Powell, Domain's chief of research and economics, said a downward rate cycle and persistent housing shortages would keep driving property prices up. "A rate cut prompts buyers to act quickly, fearing further price increases. "Buyer inquiry volumes are up year-on-year in all of our capital cities," Dr Powell said. Senior economist at REA Group Eleanor Creagh agreed two rate cuts this year and the prospect of more would boost demand — and therefore prices — when there aren't enough homes to go around. "In terms of housing supply, we've still got constraints on the delivery of new homes, particularly in major capitals." Rate cuts and housing shortages aren't the only factors driving buyer FOMO. The Labor government's election win means its First Home Guarantee scheme will be extended to allow a larger pool of buyers to purchase with as little as a 5 per cent deposit, without Lenders Mortgage Insurance, from July 1. While this helps more first-home buyers, it intensifies competition. Meg Elkins, a behavioural economist at RMIT, said supporting first-time buyers while not propping up prices artificially "is a very difficult balancing act". "We know that if you increase subsidies around housing, it can increase capacity around borrowing and push up those prices." Dr Elkins added that millennial first-home buyers were also feeling external pressures to reach life milestones. "Many millennials feel they should own property by 30," she said. "And they're facing the toughest purchasing conditions in history, with high interest rates, living costs and student debt combined with stagnant wage growth. "They're so badly done by." If those conditions weren't tough enough for buyers, the market has become swamped with buyers' agents, who "can easily outplay regular bidders", Ms Manji said. Buyers' agents often have close ties with agents, and they know how to negotiate. Plus, they've significantly enlarged the buyer pool by acting on the ground for remote clients. "Buyers are now facing competition from people across Australia and beyond," Ms Manji said. It's not all doom and gloom. The prospect of higher prices following another rate cut could entice more people to list their properties for sale, boosting supply. Another factor restraining price growth is, of course, affordability. The Housing Industry Association reported affordability was at a 30-year low in the second half of last year. "I think we're all a bit scared after the cash rate hikes, cost of living pressures and wages growth that hasn't kept up with price growth," Dr Powell said. Dr Elkins suggested researching available government grants, enlisting the help of a buyer's agent, or considering that dreaded word among buyers: compromise. "You may not get exactly what you want. So what are you willing to give up to get closer to your ideal?" Mr Martin isn't prepared to compromise on location or buy a property he dislikes — and he knows that comes with consequences. "There is definitely a FOMO because the prices will rise, potentially pricing me out," he said. "It's very frustrating. If this goes on for another few months, I'll be locked out of the market."
Telegraph
23-05-2025
- Business
- Telegraph
I can finally afford to buy a London flat. Here's why I won't
I'd always assumed that as soon as I had scraped enough cash together to put a deposit down on a home, I would waste no time in getting on the property ladder. After all, that is what everyone does – or at least, everybody used to, because it was affordable and plain common sense. A typical first home cost under £50,000 in the 1980s, with the average first-time buyer aged 28 and equipped with a deposit of less than £3,000, according to research carried out by developer Keepmoat Homes. But things have changed drastically since I was born in 1997. The average English home now costs almost eight times the median annual salary, up from 3.5 then. The choice to buy a home has become monumental in financial terms – yet continues to be viewed as the most logical one to take as soon as it is feasible to do so.
Times
23-05-2025
- Business
- Times
Yes, I'd rather have a house than a spouse
This summer I've hit a new record: 0 wedding invitations. But housewarmings? Those are coming in thick and fast. No wonder: Zoopla figures show that young people's biggest financial priority is buying a house, with 59 per cent saving up for that, as compared with the 6 per cent scrimping for a wedding. This is rife among Gen Z, according to the data — but I can attest that millennials too are opting for a run-down three-bed to call their own over canapés and marquees. At 33, now the average age of a first-time buyer in the UK, I've found my dinner table talk in London has gone from nights out and Deliveroos to surveys and stamp duty rises. A few weeks ago we were
