First-time buyers

We understand the difficulties and complexities that come with buying your first house. Our team is approachable and grounded, ensuring that we communicate as clearly as possible to make first-time buyers feel relaxed. We make the experience jargon-free and as straightforward as possible. We're always available if you have any questions.

Purchasing your first home is one of the most significant purchases you will make. Our team has years of experience supporting first-time buyers to buy their first home. Buying your first home can seem complex and one of great difficulty, but we make sure that you understand the challenges that can also happen during this process.

To get a better understanding of why we do what we do, Mark Scott, Five Star Mortgages’ Director explains his first experience of trying to get a mortgage and why he wanted to build a team that can support you through your first experience and make it as streamlined and simple as possible.

Access to the finance you need to buy your first home

An exciting time if you’re buying a house for the first time but the process can feel quite overwhelming. A situation we completely understand which is why we’ve been able to guide many first-time buyers through the whole process.

In essence, a mortgage is a financial product that will provide the funds you need to buy a property. The money is paid back in monthly instalments and is secured against your home which means if you don’t keep up the repayments the mortgage lender can sell your house to repay the loan.

Our team is here to work with you, to provide the support you need throughout the whole process. 

How much can you afford?

This is often referred to as the affordability criteria and will determine how much you can borrow from the lender. The elements you should take into account include your income, existing financial commitments, and family situation. Bear in mind this will also cover any loans, credit cards, or car finance and will have an impact on how much you can borrow.

The period over which you will be repaying your mortgage, referred to as the term, is something else to consider. In general, the longer you have the product the more affordable it becomes as you’re paying it back over a longer period. It might also mean you can increase the amount you borrow because the repayments are more manageable.

Issuing an initial mortgage decision 

Once you have found your property, most estate agents want to see the initial consent from a lender for your mortgage. This is known as a Decision in Principle (DIP) or Agreement in Principle (AIP). At this stage and with our help, you’ll have been through an initial verification of income and a credit check.

The estate agent may then ask you for further documentation:

·       Identification documents

·       Proof of your deposit

·       Details of the solicitor who will deal with your purchase 

Finding a reliable solicitor is an important part of the process but we can recommend a trusted law firm we deal with regularly.  They will focus on the house purchase transaction and liaise with the seller’s solicitor as well as the estate agent. We are also involved at this stage to ensure you’re kept informed.

When you’re offer is accepted by the seller you will receive a letter from the estate agent confirming you have reserved the property. This is known as a Memorandum of Sale and will allow you to start the mortgage application process.

Completing a mortgage application

It’s important at this stage to understand your circumstances and future aspirations. This will enable us to research the right mortgage product for your needs. As an independent mortgage broker, we can look at the whole of the market to find a suitable product for you.

The next step will be to discuss what type of property valuation to undertake. There are broadly 3 types of valuation. 

·       Basic valuation – for the lender to confirm you’re buying the property at a fair market price.

·       Homebuyer report – covers the condition of the property internally and externally.

·       Building survey – a detailed report on the structural integrity of the property

Together we can go through these options with the relevant mortgage lender to agree on what you need. This is all part of the process of completing the mortgage application form and we will guide you through every stage.

Obtaining a formal mortgage offer

When you’re approved for a mortgage you’ll receive a formal mortgage offer. This will be valid for up to 6 months so you need to complete the purchase within this period. If for whatever reason this doesn’t happen, it will be at the mortgage lender’s discretion whether they renew or withdraw the offer.

The relationships we’ve developed with mortgage lenders over the years will ensure this situation is managed for you. There shouldn’t be any surprises because we’ll be in constant communication with all the relevant parties.

Exchange of contracts

Important at this stage to read carefully all the documents provided by your solicitor and the seller. We will help you check through the information and highlight any relevant areas. Once the contracts are exchanged your deposit will be paid and you are legally obliged to purchase the property.

Building insurance and wider protection

You must obtain insurance protection for your home, many lenders state this as a requirement because the house is being used as security against the mortgage. Once you have exchanged contracts you become responsible for insuring the property.

At Five Star Mortgages, we offer a wide range of home insurance products to cover your building and contents. These will include any structural damage to the property and the contents of your house such as furnishings, belongings, and fittings. Policies can also include accidental damage and items destroyed or stolen outside of your home.

In the interests of protecting you and your loved ones, there are other insurances you should also consider now that you have the financial commitment of a mortgage. These include life insurance, critical illness cover, and income protection. As independent advisers, we can search the whole of the market to find insurance products that match your individual needs.

Completion of your house purchase

Once your solicitor receives the signed contract from the seller and vice versa all that is left is to transfer the final payment to their solicitor. When confirmation from the solicitor is received, you are then the legal owner of the property and the keys can be collected from the estate agent. Mortgage repayments will begin from the completion date.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Frequently asked questions for first-time buyers 

Q. What is a repayment mortgage?

A. This is a popular type of mortgage product. The monthly mortgage repayments will cover capital (the initial sum of money you borrowed) and interest (what you’re being charged in interest to borrow the money). When the term of your mortgage comes to an end, the mortgage balance will be paid off and you will own the property outright.

Q. What is an interest-only mortgage?

A. The monthly repayments only go towards the interest on the amount borrowed from the lender, the loan amount is not reduced and remains the same throughout the mortgage term. It makes the monthly payments lower than a repayment mortgage. However, at the end of the mortgage term, you’ll need to pay back to the lender the amount you borrowed. This is often financed through a separate investment or funds acquired from the sale of the property.

Q. What does SVR mean?

A. This stands for Standard Variable Interest Rate and is the value set by individual mortgage lenders. It will change in line with the market but generally follows the changes to the Bank of England base rate.

Q. What does LTV mean?

A. It means Loan to Value and relates to the amount of your mortgage (the loan) versus the value of the property (the value). For example, if you’re buying a house that is £100,000 and a mortgage provider grants a loan of £90,000, the LTV is 90%. In general terms, the lower the LTV the lower the mortgage interest rate.

Q. What is an Early Repayment Charge (ERC)?

A. This is the amount you need to pay for clearing your mortgage loan early and is usually a percentage of the loan value. It could be a fixed sum or an amount that decreases over time.

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