Moving Home Archives - Beverleymoneyman

What is Gazumping? Should Home Buyers Be Afraid Of It?

The term ‘gazumping’ is a term that may be familiar to you, however, have you may not be sure of what it is about. The word ‘Gazumping’ is terminology for when the seller of the property you are interested in accepts another offer from another party, prior to your purchase being completed.

Originating from the Yiddish word ‘Gezump’, it was used to describe when someone swindles or cheats someone out of something, being primarily used way back in the 1920s.

Now ‘Gazumping’, it is a word prominent in house buying and was regularly used in the 1970-80s.

Is Gazumping illegal?

Through our experience as a mortgage broker in Beverley, we have been able to speak with customers regularly on the topic of Gazumping. We’re often asked if Gazumping is illegal, and the unfortunate answer to this, is that it’s not.

This is something that many home buyers may be asking when they go through the home buying and mortgage process across the country. Nobody quite understands how this type of practice is legal, despite how immoral it is.

The reason that Gazumping is deemed to be completely fine and legal, is because you and the seller are not contractually bound, no meeting with lawyers has taken place. As such, they have no obligation to sell to you, as your agreement has only been verbal.

The idea of being gazumped can be a scary one for first time buyers in Beverley especially, even if it may be less likely to occur. It’s an understandable feeling, as this gives you the risk of losing your dream home and nobody wants that to happen, especially if you are in a property chain.

Another factor that can affect home buyers is the idea that they may lose money from being Gazumped. Non-refundable expenses that are involved with the home buying process such as property surveys, conveyancing fees and mortgage arrangements fees.

How does Gazumping happen?

As touched upon above, the agreement between both parties to buy or sell a property, whilst you may want it to be honoured, is not legally binding. This only happens when lawyers exchange contracts to make it official.

It is not a simple process to make this happen. The mortgage process can often take several weeks, with the point between an offer being accepted and the contracts being exchanged taking quite a while to happen.

It’s generally during this step where an eager first time buyer in Beverley may jump in whilst your process is going on, and make a much more preferable offer to the seller of the property. They can do this either by speaking with the estate agent or going directly to the seller themselves.

The more favourable deal may also include things such as a higher purchase price, a faster sale or a particular buyer who is not going through a property chain. Gazumping covers all these circumstances wherein a seller may prefer another buyer over you, despite giving their word.

Buyers Market vs Sellers Market

One factor that could impact the chances of being Gazumped by a seller is the type of market that is currently happening, such as a sellers market or a buyers market.

For example, if the market is currently a sellers market, this means that there is a very popular, busy market. Commonplace occurrences are high demand, fewer properties, people wanting to buy and bidding wars between buyers that could see property prices rise.

In this instance, you will find that Gazumping is much more likely to happen, because someone may jump in with a higher bid for the seller, who at that point may be likely to accept.

On the other side of the coin, if the market is currently a buyers market, this means there are more houses than buyers, and a seller may not be receiving a lot of offers. This means you have less chance of someone Gazumping you and there is more space for price negotiations with the seller.

Ways to Avoid Being Gazumped

One of the reasons why you may experience a delay between your offer being accepted and the contract exchange, could be because you need a property survey to be carried out.

Below are some useful ways in which you could increase the possibility of you achieving higher mortgage success and avoiding being Gazumped.

  • Search for a conveyancing solicitor or surveyor early into the process, so you can reduce the wait time.
  • Provide all the necessary information as quick as you can for a smoother mortgage process.
  • To show the lender that you are ready to go, obtain an mortgage agreement in principle. This will provide you with an advantage over other buyers who cannot yet prove they are eligible for a mortgage.

Other Helpful Gazumping Tips

We would recommend that you first ask the seller to remove the property from the open market. They’re under no obligation to do this, but doing so means the property is not as visible to potential Gazumpers.

We typically find a lot of sellers will honour their buyers request and indeed remove it from the open market, especially if it is a buyers market and they aren’t receiving many offers.

Putting in place a lock-in agreement, where both sides will make a deposit towards a binding agreement between one another, can be another handy trick. If any one party chose to withdraw or alter their deal, the other party would keep that parties deposit.

This can be costly due to the legal fees involved, though it may very well be worth the money saved and security provided to you during your mortgage process.

You could also look at insurance products, as having something in place to protect you from Gazumping can be a useful way to save yourself from losing money.

How a Mortgage Broker in Beverley Can Help

Even though Gazumping can never be 100% prevented, there are lots of ways to protect yourself as a buyer. As an open & honest mortgage broker in Beverley, we are here to help.

Book a free mortgage appointment today and see how our helpful team are able to help you on your mortgage journey as a first time buyer in Beverley.

Top 5 Mortgage Hurdles in Beverley

Specialist Mortgage Advice in Beverley

Having the best help and support from an expert team can help your mortgage journey run smoothly. Obviously, in some cases, it’s not all plain sailing. Here at Beverleymoneyman, we have helped many customers overcome a range of hurdles to get towards their homeowning goals. Below are just a few of the most common mortgage hurdles we have encountered as an expert Mortgage Broker in Beverley.

Childcare Costs

It’s very likely that you would be declined for a mortgage because of childcare costs. One thing to keep in mind though is that your borrowing capacity may be reduced because of these costs usually being such a large sum of money.

You will find that most lenders will view childcare costs as a loan or credit commitment. Therefore, regardless of if you have these costs or not, having children, in general, would still be seen as a larger outgoing each month.

If you are in this circumstance, you may be likely to borrow less than a mortgage applicant with the same income but with no children. Depending on the mortgage lender, you may find that some take child care costs into account so could mean your amount is increased but this isn’t always the case.

Mortgage involving Divorce/Separation

Usually, you buy a home with your partner with no intention of going through a divorce or separation. Unfortunately, this can happen and can result in a significant change in shared financial commitments.

Starting a New Job – Can I get a Mortgage?

This all comes down to the mortgage lender. One may require you to have been in work consistently for a certain period of time though some may have different criteria.

On the other hand, you may still be able to get a mortgage if you are beginning your new job very soon . You may need to have a signed contract and a written job offer in order to achieve this.

Keep in mind that having gaps in employment could make the process challenging as this will be bought up by some lenders. However, probationary periods should be fine.

Evidencing Your Deposit

Anti-Money Laundering precautions are really strict. This is why you will need to provide evidence of your deposit to your lender as well proving the origin of your savings. As well as your lender, an estate agent or solicitor estate agent or solicitors may ask you for this as well, it just comes down to who you go with.

When it comes to cash deposits, these are not ideal! Parts of your bank statements that are worrying to a lender could be questioned and could result in your mortgage application being rejected.

There is a possibility for you to go down the gifted deposit route where you are gifted a part or all the deposit from family or friends. It’s important that the person gifting the deposit states in writing that is not intended to be paid back as a loan and, like the name, is a gift.

Speak to a reputable Mortgage Advisor in Beverley

If you are finding the mortgage journey difficult as a First Time Buyer in Beverley or are finding the Moving Home in Beverley journey stressful, book your free mortgage appointment to connect with one of our Mortgage Advisors in Beverley.

These are only just a number of situations so if you don’t apply to any of the ones above, there is a chance we have helped someone in your situation before. Get the help and support you need for your mortgage application from one of our open and honest Mortgage Advisors in Beverley.

9 Questions to Ask When Buying A House in Beverley

First Time Buyer Mortgage Advice in Beverley

Beginning the mortgage journey as a First Time Buyer in Beverley can be an exciting but daunting experience, especially if you have little to no knowledge of the process. With a Mortgage Broker by your side, this doesn’t have to be the case. To make the most out of your house buying journey, it’s best that you are prepared. Here is 9 questions to ask yourself when purchasing a house as a First Time Buyer.

The 9 most common questions:

1. How much interest has there been in the property/development?

Getting a mortgage could be one of the biggest financial commitments in your life is it’s best that you give yourself some thinking time about a property before proceeding.

To determine how much thinking time you have, it’s best that you ask how much interest the property has got so then you aren’t missing your chance of potentially getting a property. For example, if the property has had a lot of interest, it’s likely you will need to come to a decision quickly.

2. Is there a property chain?

A property occurs when there are a number of transactions happening at the same time for every sale purchase to be completed.

The mortgage process can be affected if the property is part of a property chain.

If there is no onward chain like a new home, bereavement or emigration, there is more chance that you would be able to move in quickly considering that you are not part of a chain yourself. In the case where you don’t need to sell your own property first, you will have more of an advantage because you won’t be disturbing the buying process.

This is something that can benefit you when negotiating property prices.

3. What’s included in the sale?

In some cases, the previous owners may leave some previous items behind, which can be a benefit for you. Items like washing machines, fridges, freezers or a shed may be left for the next occupant.

Providing that the appliances work, it can be perfect for new buyers who are looking to save a bit of cash to get something new and modern in the future. If you don’t want these items, it’s the new buyer’s responsibility to dispose of them.

For new properties, you may have the option to purchase any extras that are brand new and others for you on your moving day.

Are the neighbours friendly?

When it comes to deciding on a property, it’s best to see what your neighbours are like. Having a good or bad neighbour can be a key component in your decision. This is important if you are moving into an area you don’t know much about.

Neighbours can be an element that many people factor in when they are deciding to move into a new home. First impressions are not always key, however, it can be good to get on with the as you may live there for a while.

How much does it cost to run?

This can depend on where the property is in Beverley. Because of this, it’s good to ask about this as well as do some research yourself. Questions could include how much the council tax is or the average spends on utilities which you could ask your seller or look into. This can be useful information to know and can also be helpful when managing your budget for each property.

6. Which way does the house face?

This is another aspect of property hunting that many people see as an important requirement to them. You may fancy relaxing in the garden in late summer evenings as well as reading in natural light. Having this feature can mean you pay a more premium price so you have a south-facing garden with sunlight shining on you for most of the day.

7. After moving in, how much will be needed?

The work that may need to be done on the house might need to be factored into your budget. Some topics you may want to consider include:

  • Make sure the property is energy efficient.
  • Sorting ay damping issues (if any).
  • Changing the furnishing.

8. Are you open to offers?

Negotiating a property price is a standard part of the house-buying process. With this, you need to be as prepared as possible to make an offer on a property that you like.

Speak with the seller or estate agent if you want to get an idea of how low in price the seller would want to go. Furthermore, it’s good to ask if any other offers have been made and rejected before your bid.

9. When can we move in?

It’s good to have a moving date set out so you can plan what you need to do before that date. You will need to plan tasks like instructing a conveyancing solicitor, packing your belongings, and organising a removal van to transport your belongings to the new property.

What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Beverley

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Beverley will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in Beverley & those who are Moving Home in Beverley. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

Agreement in Principle and Soft Credit Searches

Mortgage Advice in Beverley

More and more people these days pay much closer attention to their credit rating, especially First Time Buyers as they tend to worry about being accepted. Consumer awareness of credit scoring is higher now than ever before. We’d say at least half of the people who contact us for the first time, have already looked at their credit report online.

There are many different credit reference agencies out there. Most people will have heard of Experian or Equifax, but we recommend potential new clients to use Check My File for a 30-day free trial, which is £14.99 a month thereafter and can be cancelled at any time. This is because of this report “sweeps” several of those reference agencies and collates the information into an easily understandable colour-coded report.

Often, clients ask if we will be doing a credit search on them, because they are aware that too many searches can have an adverse effect on their credit score. Lenders always run credit checks but we always seek a client’s permission before doing so. There are 2 different types of credit searches that Banks can run on a customer: hard searches or soft ones.

What is a hard credit search?

A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is the lender is looking into your situation quite closely. If you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on, is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed. Either that, or it turns out you have provided false details.

The bad news about a hard search though is that it leaves a “footprint” on your credit file. This means anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing, but if you have several footprints registered in a short period of time then it could look like you applying for lots of credit at the same time.

The footprint does not state whether your application was successful or not. However, if you have several searches over a few weeks, then lenders’ systems could wrongly assume you are being declined on the basis of; “Why else would you go to lender number 2 unless lender number 1 had said no?”.

The odd hard footprint on your record from time to time is no big deal. There’s no need to worry too much about this, just be careful not to have too many.

What is a soft credit search?

A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites. This would give you an indication of what products might be available to you. It can also be useful if someone wants to verify your identity.

Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.

You will be able to see that someone has carried out a soft search on you if you check your credit file. The good news though, is that these searches are not visible to other financial institutions like banks. This means that you can apply for an agreement in principle for a mortgage, without it damaging your credit score. This is irrespective of whether it is successful or not.

If you are wanting to make an offer on a property, we always think it is an excellent idea to have your mortgage agreement in principle in place prior to contacting the estate agent. You want to give yourselves the best possible chance of securing the property you want at the lowest price so if you can present yourselves as having your finances in place then you are definitely putting yourself in a stronger position. Having the agreement in principle also sometimes puts the agent off trying to “cross-sell” their own in-house mortgage services to you.

How Much Can I Borrow For A Mortgage in Beverley?

Mortgage Advice in Beverley

The two most common questions we are asked on a daily basis are, “Can I get a mortgage in my situation?” and “How much can I borrow?”. In this article, we explain the latter which has changed quite a lot in the past decade.

Historic Rules

Back in the ’80s and ’90s, most mortgage applications were manually underwritten. That is to say, there was lots of “human intervention” in the process of approving mortgage applications. You’d make an appointment with your Building Society Manager, and they would interview you.

They would encourage you to save with them for a while until you prove yourself credit-worthy. The manager would then grant you the equivalent of an agreement in principle. This would then be followed by advice on how much they were prepared to lend.

This sounds very much like a highly personalised process with a common-sense approach. That being said, it could lead to inconsistent decision-making. The manager has the discretion to interpret the lending manual. In other words, it would be possible to approach the same Building Society in a different town or city. You could possibly obtain a different outcome.

With a view to eradicating the above and more importantly, cut costs, Lenders moved to automated affordability calculations. “Caps” were applied so they would lend you more than, say, 3 or 4 times your household income.

As the 2000s progressed, lenders were becoming more and more generous in how much they would lend. Some lenders would offer self-certified mortgages. This was where no background checks would be carried out as regards how much an applicant actually was earning!

The market crashed and to all intents and purposes, 2008-2010 were very difficult years if you were trying to get on the property ladder. The lenders battened down the hatches and created a very cautious (over-corrected) lending environment.

Nowadays Approach

The market recovered and in 2014 the regulator launched the Mortgage Market Review (MMR). This was a new set of guidelines for Lenders to adhere to. Gone were the old-style income multipliers which took little account of household expenditure. Before 2014, two applicants earning the same could borrow roughly the same as each other.

This was irrespective of how much they spent each month. Then came new affordability models. These took a much more forensic view of how mortgage applicants managed their money on a monthly basis.

There is still a “cap” in place (most Lenders will not go past 4.75 times your annual income) but your spending habits are analysed also. So, for example, if you have high childcare costs, lots of credit commitments and a student loan you will be offered less than your work-colleague who doesn’t have any of that expenditure.

We are still constantly surprised by the large variances lender to lender in how much (or little) they will lend. Some lenders seem to penalise low-earners (perhaps they are not looking for that type of applicant), some take pension contributions as a fixed outgoing so would often lend, say a public sector worker with a big pension deduction less than a private sector and so on.

It really is horses for courses and if you need to maximise your borrowing capability to obtain the home you need to buy then you’ll definitely need a Mortgage Broker in Beverley on your side who can research the market on your behalf to see if anyone will lend you the amount you need.

The Importance of Changing Your Address in Beverley

Credit Score Mortgage Advice in Beverley

It’s very likely that you will be asked what your credit score is like when it comes to applying for a mortgage. There are a plethora of factors that can affect your credit score. For instance, the fewer addresses you have on your record, the better your credit score.

As mentioned, fewer addresses on your file can support your mortgage application when done correctly.

We do find that many applicants, particularly First Time Buyers in Beverley, leave their previous addresses on their records. They may have done this accidentally or as a way to keep their credit score from lowering but they do need updating.

What information needs correcting?

There is a range of documents you will need to update whether it be bank statements, credit cards and electoral roll information. We do find that many applicants disregard this information as they believe it won’t harm their credit score, however, it can create a significant amount of damage.

You may be in a situation where you get an unpaid ticket that is sent through to your old address. If you don’t let the post office know to make sure all mail gets forwarded, the longer it goes unnoticed which can result in receiving a CCJ.

Receiving a CCJ on your credit file could result in losing lots of points on your credit file. This will damage your credit history and make things more difficult for you when it comes to being successful in your mortgage application.

Check before you apply

We do recommend that you give your application a thorough check from start to finish. Begin with your address by making sure that the address on all of your accounts (credit cards / current accounts) and electoral roll are all registered to your current address.

This is usually targeted at applicants who are currently living in rented accommodation and haven’t changed their address from their previous property.

It’s best you double-check everything when applying for a mortgage just in case you miss anything. Keep on top of your address, making sure everything is updated can make a positive impact on your mortgage application.

Find out the exact date you moved into your rented apartment / new home and when you moved out. This will prevent any cross-over that may show you were living in two different addresses at once.

If you don’t do this could lead to confusing the lender and could potentially cause damage to your credit file or mortgage application.

It will be very beneficial to have a Mortgage Broker in Beverley to provide a helping hand as they will make sure your application is perfect before it’s submitted. They will also check that all information is updated correctly to have the best possible chance of being accepted.

Impress the lender

Demonstrate to the lender that you tried your best to get your application accepted. You may have evidenced your deposit to show how you have saved up or you have consciously updated your address. Either way, it will massively help your application and impress them.

In the situation when you have an outdated address that is connected to one of your accounts, your lender will see that you didn’t check to see if any of your addresses needed updating. This could show to a lender that you haven’t taken things seriously.

Mortgage Advice in Beverley

To conclude, it’s important to change your address and any other factors stated above in order to prove to the lender that you are serious about this financial commitment. Therefore, we do strongly suggest that you check up on your file to make sure your application is up to date. If you are wanting a second set of eyes on your application, take advantage of our free mortgage appointment in Beverley.

Here at Beverleymoneyman, we have a team of expert Moving Home Mortgage Advisors in Beverley who are available 7 days a week. We look forward to helping you secure a great mortgage deal and get your application looking ready to go!

How Much Deposit Do I Need To Buy a House in Beverley?

How much deposit you need to buy a property depends on your circumstances and what it is exactly what you are trying to do. Here we explore how much you might need given your own personal situation.

Why do I need a deposit anyway?

In years gone by 100% mortgages were readily available and indeed before their demise, Northern Rock was offering 125% loan to value mortgages, that is to say, if you were buying a property valued at £100,000 they would lend you up to £125,000.

Lenders need you to put down a deposit simply to reduce their lending risk. If they lend you 100% of the purchase price then for some reason you fall into arrears and they need to take possession of the property then it only takes a small dip in house prices for them to suffer a loss (and they don’t like that).

Also, there is a school of thought that says if you haven’t invested some of yours or your family’s money into your home then you might find it a bit too easy to “walk away” should the going get tough and you were struggling to meet your monthly payments. Also, if you are not in a position to save up say, 5% of the purchase price yourself then it could be argued that you’re not quite ready to get onto the property ladder.

Won’t the government pay the deposit for me?

No, but if you can find 5% of your own resources then you could qualify for the government’s Help to Buy equity loan scheme. This applies to new properties only. You put in 5% and the government loans you up to 20% to make up a 25% deposit. After 5 years you need to look at paying the equity loan back possibly by way of a remortgage or from savings you have been able to make in the meantime.

I have a 5% deposit – is that enough?

At the moment, yes 5% is enough in lots of circumstances. Not all Lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify. There are lenders out there that would consider you for a 95% mortgage with an average credit score but the rate of interest would be higher.

My credit history is poor – how much do I need to put down?

Many of the specialist lenders want you to put down at least 15% deposit if you have a poor credit history, once again as above this is simply to reduce their risk in case a repossession occurs. It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not impossible.

What about buy to let?

You’ve always needed to put down a larger deposit for Buy to Lets and most lenders at the moment are looking for 25%.

The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.

Can I take out a loan for the deposit?

This could be possible but the vast majority of lenders won’t let you do this, essentially this would still be 100% lending.

Can someone gift me the deposit?

Yes, this happens all the time. Generally, it’s “Bank of Mum and Dad” gifting or other family members but even family friends can gift you money as long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift.

Are there any circumstances at all where I don’t need a deposit?

If you are buying as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the Right to Buy scheme then normally you don’t need to put any of your own money in as the equity is already “built-in” to the deal.

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Getting Prepared For A Mortgage in Beverley

You may be here because built up a large amount of savings for a deposit on your first property and are wondering what’s the next stepping stone to take on your homeowning journey. The amount of deposit you need to put down to buy a property in Beverley will be determined by your mortgage goals and your current financial circumstance.

As a First Time Buyer in Beverley taking the first step onto the property ladder or this is your second time and are looking at Moving Home in Beverley, our expert term could help you. Below we have created a helpful guide that will hopefully help you put yourself in the best position to be mortgage ready when it comes to starting your application.

Get mortgage ready in Beverley

Up to date credit report

To start, you need to get an up-to-date credit report. By having this with you, you can provide a financial landscape to your designated Mortgage Advisor in Beverley. We do recommend that you pay off any outstanding amounts like mobile phone bills and instalments before you get a copy.

Don’t worry if you struggle to get an up-to-date credit report on time, your advisor will be able to help you with this.

Agreement in Principle

Before you begin your mortgage journey. it’s key to obtain an Agreement in Principle. This document is important when it comes to making an offer on a property. With an AIP by your side, you are demonstrating to the estate agent that a lender will agree to lend you a certain amount from them in principle by showing them ample evidence of your income, credit history etc.

Remember that AIPs can expire normally within 30-90 days. In the case that your AIP does expire or you need support getting one, our friendly team can organise this for you usually within 24 hours of your mortgage application. Our team are here to provide you with the expert Mortgage Advice in Beverley that you need.

Budget Planner

Prior to beginning the mortgage process, many applicants usually have a rough estimate of their expected outgoing after they move house. By working out this estimate, you can be able to have a rough idea of the amount of disposable income you have to pay your mortgage. It’s likely that you will have expenditures and regular outgoings such as credit agreements and bills to your weekly food shop. In the case where you are finding it difficult to balance out all these financial outgoings, we will happily send you our version of a Budget Planner to help you out.

Document Checklist

It’s best to keep an organised folder with the documents you need when you are starting your mortgage application in Beverley.

Proof of ID

Providing a form of ID will prove that you are who you say you are. This can be shown through a driving license or a passport. Keep in mind that you are not able to use the same form of ID twice so, if you use your passport for this proof of ID, you will not be allowed to use it for another proof of ID evidence and vice versa.

If you are an applicant who is a non-UK national working over here on a visa, you will need to provide that too.

Proof of Address

Along with this, you will need to prove where you live. This may require you to provide ID and a utility bill/bank statement. It’s important that you put your current address on all of your accounts and memberships in order for them to be up to date. By doing this, you are reducing the risk of your application being harmed as incorrect or previous addresses linked with your name can cause this.

Last three months’ bank statements

Having this document with you is crucial as it can be a big determining factor to whether or not you qualify for a mortgage. You will be required to provide and will need to be at least three months’ worth. From a lender’s perspective, they will be able to have an insight in the way you manage your money as well as what goes in and out of your account.

When it comes to outgoings, lenders do not favour regular gambling transactions along with general bad spending habits. If you are in your overdraft on a daily basis or direct debits have bounced consistently will also not put you in the best view in the lender’s eyes.

Evidence of deposit

To keep in line with Anti-Money Laundering regulations, it is important that you provide evidence of where your deposit has come from. It’s best to have your savings kept in one account and try not to move them around. This is still the case with gifted deposits you would leave the money inside of the gifter’s account instead of transferring it into your own.

Lenders like to see that you have accumulated savings over time in a savings account. Help to Buy and Lifetime ISA are helpful for this. For those getting a Gifted Deposit in Beverley, the individual who is gifting you the deposit will have to prove where they have got the funds from as well.

Proof of income

Proving your income plays a big role in the process. If you are employed, you will need to provide the last three months’ payslips along with your P60. Furthermore, overtime, bonuses. commission and shift allowance are normally factored in and taken into consideration too. For part-time employees, they will need to provide more evidence of their income. This does depend on the lender though.

If you are Self Employed in Beverley, assessing your income will work a bit differently. First, you will need to show a minimum of 2/3 years’ accounts and earnings from the revenue. We have a team of Mortage Advisors in Beverley who have rich knowledge of this.

Is Your Interest Only Mortgage Ending?

Mortgage Advice in Beverley

The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.

Thousands of interest only mortgages are maturing every year and lots of mortgage-holders are not prepared to repay the capital sum owed. Here we examine how this situation has occurred and what can be done.

What is an interest only mortgage?

Interest only mortgages remain popular amongst buy to let applicants who buy up properties for extra income, but in the 80’s and 90’s most residential mortgages were set up this way. The idea was that you would only pay back the interest on the money you owed and you would pay back the capital lump sum at the end of the term.

When you took out an interest-only mortgage you may also have been advised to set up a repayment vehicle such as a low-cost endowment policy. The policy would then mature and was designed to repay the capital balance in full whilst also providing life cover through the term.

Unfortunately, many people weren’t made aware of the risks attached to these products, in particular, that there was no guarantee the policy would mature for a sufficient amount to repay the mortgage debt and this led to many applicants being compensated for being mis sold to.

Why have people still got these mortgages?

It’s unlikely that you will have taken out an interest-only residential mortgage in the last few years as they are fairly difficult to get unless you can prove a robust strategy for paying back the capital. If you took out an interest-only mortgage in the late ’80s or ’90s and have not switched it to a capital repayment then it could be maturing soon and action needs to be taken.

What can be done?

If you have found yourself in this position it is highly likely that your mortgage lender will have been writing to you asking how you intend to repay the capital. It’s vital that you keep the line of communication fully open with them, they will not want to take your property into possession and will only do so as a last resort.

Here are some of the options you can consider:

  • Ask your lender to convert to a repayment mortgage
  • Sell your property and consider downsizing
  • Use savings/other investments to repay the outstanding balance
  • Remortgage to a new lender
  • Consider a Retirement Mortgage

The retirement mortgage market has become seemingly popular, largely due to the number of interest only mortgage reaching cessation with no repayment plan in place.

There are far more retirement products available these days and some providers let you service the interest element by way of regular monthly payments.

This means that when you die the capital balance is repaid from the house sale and the surplus passes to your family.

Can I still get an interest only mortgage?

Interest only mortgage still have their place, for example, you may have a portfolio of properties or other investments in place to repay the money you have borrowed. Lenders will now want to examine your strategy for repaying the loan much more deeply than they did in the past to ensure they are not left with a mortgage on their books which could default.

They will want a big deposit to go down, possibly as much as 50%. They will also want to “sense-check” your plans, for example, will you have enough equity in your home to be able to down-size to a reasonable property at a later date.

Beverleymoneyman.com & Beverleymoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.

Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk

The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.
Should you have cause to complain and you are not satisfied with our response to your complaint, you may be able to refer it
to the Financial Ombudsman Service, which can be contacted as follows

The Financial Ombudsman Service, Exchange Tower, London, E14 9SR
www.financial-ombudsman.org.uk

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