Whether you are a First Time Buyer, a Home Mover, or a Landlord, you must have a deposit when purchasing a property with a mortgage. The greater the deposit amount the better mortgage deal you will be able to obtain from the lender. Deposit is the money you put down as a proof of your interest in the property and your commitment to the loan agreement.
Bear in mind that the deposit is always calculated as a percentage of the value of the property you would be purchasing, and it is being referred to as Loan-to-Value (LTV).
would become your mortgage loan if successful on the mortgage application.
When looking into lending money, lenders usually look at one’s credit score.
Credit score is a snapshot of how you have been managing the money and the credit you already have over the period of last six years. If you missed a payment or defaulted on it, it will be reflected in your credit report and thus the credit score.
Being overly cautious with credit commitments and not having any credit cards or personal loans is not best news for the lender either. How will they know if you can handle a mortgage loan if so far you have shown no history of handling any financial commitments?
You can check your credit score only with various credit agencies (bureaus), i.e.: Experian or Equifax, and not with the banks. Various lenders have various lending criteria and various minimums on credit scores that they accept when considering a mortgage loan.
It is a prudent idea to check your credit score before you apply for a mortgage. If there is anything not updated in your file and your credit score still reflects a missed payment or a not-settled default, you will give yourself the needed time to correct the file and to remedy your overall situation with the lenders.
ou do not need to send your credit score to the lender. They will access this information themselves when considering your mortgage application. But here at NEST your mortgage advisor may very well request that you do check your credit score as it will be a strong indicator which lender might be most appropriate to go to with your mortgage application.
CheckMyFile is a website which NEST is using the most when it comes to checking our clients’ credit score. It shows all the relevant credit scoring agencies in one report. And since various lenders use various credit scoring agencies, CheckMyFile seems to be a good choice to have an all-rounded overview of our clients’ financial situation.
It is not enough to just show up in a lender’s office or at a brokerage firm and expect to be granted a mortgage loan. As with everything else in life, when it comes to finances, lenders must obtain sufficient evidence of your income to see if you could afford the mortgage.
To reduce fraud, lenders are obligated by law to check identity and address of every person who applies for a mortgage or any other form of a loan. A combination of well scanned documents, such as passport within the expiry date, UK driving licence with current address and within the expiry date, current council tax bill or other major utility bills dated within last three months are going to take care of this requirement.
Required to establish your affordability. It answers the question if you can afford to borrow and how much.
For the minimum of the last 3 months of activity, proving your level and consistency of income and expenditure management.
Whether your deposit is coming from savings or gifts, lender is required by law to check its source.
Please, note: If the property was sold overseas and the documentation was written up in a foreign language, the sale contract will have to be translated by a sworn translator and the copy of the original sales contract along with that translation will have to be presented to the broker as well.
I.e.: biometric card, copy of the passport with stamped in visa, or recently introduced settlement status confirmation.
Once your affordability is assessed, the lender will give you an Agreement in Principle (AIP), also known as a Decision in Principle (DIP). The AIP/DIP shows how much you can borrow and with which lender. Having this document in hand, you have just become a credible buyer in the eyes of both the estate agents and the property sellers (vendors). The AIP/DIP simply proves your purchasing power and your readiness to proceed with the purchase as your initial lending assessment has already been performed by the lender. In other words, you are not a “time-waster.”
Once you find the property and the offer you make on it is accepted by the vendor, your mortgage broker will start the full mortgage application process. The property valuation process (done by the lender to make sure that the value of the property is a sufficient security for the mortgage loan) is triggered and a conveyancing process begins.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority