When you are at the point of being ready to make an offer on a property, it’s important that you put your circumstances across to the seller or estate agent in such a way that gives you the best chance of having your offer accepted. Whether you are a First Time Buyer or Moving Home in Liverpool, it’s always key that you know how to make an offer on a property.
A cash buyer will always have the advantage, though if you have a mortgage agreement in principle in place you will definitely be in a better position than other potential buyers who have yet to get in touch with a Mortgage Broker in Liverpool and get this sorted.
Buying a property is a negotiation process, and so if the seller rejects your initial offer you will be asked whether you want to increase your offer. So don’t be afraid to offer less in the first instance than you are willing to pay for the property you’re interested in.
If your increased offer is also rejected sometimes it just boils down to whether you are willing to pay the asking price, especially if the property in question has just been placed on the market, or whether you are prepared to walk away and find another property to live in.
As part of our dedicated mortgage advice service, we offer you a free initial mortgage consultation. So, please feel free to give us a call if you want to speak to an expert Mortgage Advisor in Liverpool. They will try their best to attend to all of your mortgage needs.
An Agreement in Principle (also referred to as an AIP), is a piece of documentation you are given once you pass the lenders credit score. You will need one of these if you wish to qualify for a mortgage. Having an Agreement in Principle allows you to make an offer on a property you are interested in, as well as assisting when you want to negotiate on price, as it shows the seller you’re serious about your offer as a First Time Buyer in Liverpool.
The effects of an Agreement in Principle on your credit score, completely depend on whether the lender takes a hard credit search or a soft credit search. What are the differences between these? Below we’ll answer this.
Hard credit searches:
Hard searches are more in-depth than soft searches. The main difference between hard and soft searches is that hard searches leave a footprint, which can negatively affect your credit score if you fail it too many times. If you have a good credit score however, you shouldn’t need to worry going into this as a First Time Buyer in Liverpool.
Soft credit searches:
The option you’re more likely to come across these days is that a lenders soft search. These are to hard searches, what a lite phone model is to the main release, usually requiring less information and in the majority cases leaving your credit score unaffected, even in the event of not passing.
Although an Agreement in Principle can be a massive help, it doesn’t always guarantee that you will successfully obtain a mortgage. The lender will still need you to provide them with documents in order for the underwriter to make their final decision.
You can usually find small print included on Agreements in Principle that may easily be missed. We find in some cases, when customers reach out for help about their Agreement in Principle, they’ve been turned away at full mortgage application stage.
The documents you will be required to provide can include; personal ID, payslips, bank statements and things of that ilk. As your dedicated Mortgage Broker in Liverpool, we take pride in helping our customers, whether Moving Home in Liverpool or Self Employed in Liverpool, get prepared for a mortgage.
You may be able to get away with this, however, most credible estate agents will want evidence that you are able to proceed with the purchase in question.
Your Agreement in Principle will usually need renewing after around 30-90 days, though this isn’t something you should worry about. The main reason we recommend getting one so early is to avoid being told the property you’re interested in is no longer available for purchase.
Getting your Agreement in Principle sorted also means you don’t just need to jump in and buy the first house you see. It’s a fairly easy process, so if it expires, we can quite easily help you get another one.
The purpose of a mortgage agreement in principle (AIP) document is to prove that you do have a mortgage in place. To the estate agent, it proves you have good enough credit to proceed, as you have passed the lenders credit scoring system. That being said, getting a mortgage can never be guaranteed, as a full application will still require further background checks.
Now you have your mortgage agreement in principle, what do you do with it? Well, having your mortgage agreed at the outset can help you negotiate on asking price with the owner of the property. It is relatively easy to obtain and is something we can arrange for all of our clients. Almost all lenders offer an Agreement in Principle.
To proceed further with a mortgage application, you will require further background checks to cover things like evidence of income, as well as a satisfactory valuation of the property itself.
Getting one in advance can really put you in a better position for negotiating, can help you avoid disappointment and allows you to figure out your limits.
When you reach the point of being ready to make a formal offer on a new home, the majority of estate agents will undertake due diligence and ask you to prove that you can in fact afford to complete the purchase. Sufficient evidence of this include bank statements and also an agreement in principle certificate, which our team can provide for you. Once you have provided them with all this documentation, the estate agent will usually cease marketing the property and put a “sold” or “sale agreed” board up to let people know a deal is currently being processed.
If you already have a mortgage agreed before you make an offer, you are instantly more appealing to a seller as this proves you are not making this choice lightly and you’ve thought about how you’re going to afford the purchase. This might persuade a seller to accept an offer you put forward on their property that may be underneath their initial asking price.
When it comes to buying a house some customers go full steam ahead and make an offer on a property without first checking that they have the means to proceed with the purchase. This can understandably leave people feeling very disappointed if this doesn’t quite work out how they’d hoped.
By that point they may have already got their heart set on their new potential family home. By getting in touch with us early on, this disappointment can be avoided. Sometimes there are things that are causing a mortgage to decline that can be overcome over time.
For example, there may be a small issue on your credit report that is proving to be a nuisance, perhaps a disputed mobile phone bill which can be easily fixed. Maybe you thought you were on the voters roll and you’re not, something that over time can be solved. In any case, it’s better than you know ahead of time, rather than mess people about. Our team will be able to tell you what you need to do to improve your credit score for the future.
Ok, so you know you’ve got a good credit rating because you’ve never been turned down for credit, you’re registered on the voters roll and you’ve always made your credit card payments on time – so what can go wrong?
Well, you could approach 10 different lenders these days and get 10 different maximum mortgage amounts! They all calculate affordability in their own unique ways. If you’re self-employed it really is a minefield: some lenders take your net profit, others your salary and divided. Some use your latest year, others an average over 3 years.
Knowing your borrowing limits is important as then you know for sure what your price range is. We’ll be able to advise you of the maximum mortgage available to you. Also, more importantly, together we’ll work out how much you can afford to pay back each month.
A Gifted Deposit can either be the full amount or a partial amount of the required deposit to put towards a property, gifted to you with an agreement that it is not a loan and you do not owe them any money down the line.
Gifted deposits come in very handy for those who have saved enough money for their monthly repayments, but possibly due to a lower income, aren’t able to afford the initial deposit that is required for the property you are hoping to purchase. Having more gifted deposit available may also allow for you to receive better mortgage rates.
Commonly, it’s parents (birth and adopted) and carers who are able to gift you the deposit. This is often known in the industry as the “bank of mum & dad”. There is the potential for other family members to gift you the deposit, though this is dependent on specific lenders and would require care when trying to find the most appropriate mortgage lender.
When speaking to customers, we sometimes find that they aren’t aware that their parents can help with their mortgage, or don’t feel like they can ask them for help. The reality is that most parents are willing and ready to help out their children, helping them to take that first step onto the property ladder.
Statistically, taking out a mortgage works out a lot better for people than renting does, thanks in part to you being able to possibly pay less per month on your repayments over your rent. The deposit could come from inheritance, with some parents known to gift it earlier on in life if they already have enough in savings or have released a certain amount of equity from their own family home.
A lot of lenders won’t accept a loan as a means of paying your deposit due to the lender being unsure that you’d have enough free income to pay back both the loan and the mortgage simultaneously.
There isn’t a limit on the maximum amount you can receive as a gift, although there is at least one lender that insists you put in at least 5% deposit from your own personal funds.
The people who will receive the most benefits from this tend to be First Time Buyers and Home Movers. It can also be useful when used alongside the Help to Buy Scheme, as the required 5% deposit, depending on the lender, can be paid through the means of gifted deposit.
Generally speaking, all lenders will require a gifted deposit form. Depending on the lender, you may be asked to provide further proof and ID (things like a passport or bank statements).
When lenders ask for your bank statements, you can expect them to look for a wide range of things. However, their main goal is to assess whether you are the kind of person who handles money responsibly and is likely to keep up to date with their mortgage payments.
In recent months one question is being asked by applicants speaking with one of our Mortgage Advisors in Liverpool: “do gambling transactions look terrible on my bank statements”.
Whether you have an annual bet on the grand national or regularly use the internet betting sites. Clearly there is nothing illegal about properly licensed gambling.
Many people can see gambling as a mainstream hobby or pastime similar to many others. Still, it shouldn’t get forgotten that even the gambling advertisers urge customers to “please gamble responsibly” and this is the key to bear in mind when applying for a mortgage.
Consequently, whilst it is not a lender’s job to tell you how to live your life, how to spend your money or indeed to moralise on the ethical rights and wrongs of gambling, they do have a duty (underscored by mortgage regulation) to lend responsibly.
Suppose lenders need to prove to the regulators that they are making sensible lending decisions. In that case, it isn’t entirely unfair of them; therefore, to expect the people to whom they lend to adopt a similar approach when it comes to their finances.
Think about it. If you were lending your own money. Would you lend it to the applicant who gambles or the one who doesn’t?
As mentioned above, it is not illegal to gamble so just because you have the odd gambling transaction on your bank statements it doesn’t automatically mean you will get declined for a mortgage.
However, the lender will consider whether these transactions are reasonable and responsible. Thus they will mainly look at the frequency of these transactions, the size of the transactions about the person’s income, and the impact upon the account balance.
If these transactions are infrequent small amounts that make no significant impact on a regular credit bank balance, then they are not likely to be regarded as necessary.
However, if you bet most weeks or you get overdrawn the lender continuously, therefore, expected to see that as being irresponsible and decline your application.
As we’ve seen, essentially lenders are looking at your bank statements to show how you manage your money and to help them establish whether this gives them either the confidence that you are financially sensible or the evidence that you are not.
Remember, lenders are financial institutions that, either directly or as part of a wider group, often sell current accounts, overdraft facilities credit cards and personal loans, so understand that these things can all play a considerable role in prudent financial planning.
The key for a mortgage applicant is how these facilities get managed. For example, having an overdraft facility and occasionally using it, is not inherently a bad thing; regularly exceeding the overdraft limit – not so good.
Consequently, lenders will look for excess overdraft fees or returned direct debits because these would generally show that the account is not being well conducted
Other things to look out for include credit transactions from payday loan companies; “undisclosed” loan repayments (i.e. if you said on the application that you have no other loans but there appear to be regular loan payments, this could be a problem).
They would look out for any missed payments; finally, they might also consider how much of a typical month get spent overdrawn – namely if you only go into credit on payday and for the rest of the month are exaggerated, how sustainable is this mortgage?
The simple answer is – be sensible and, if possible, plan. Typically, a bank would ask for up to three months of your most recent bank statements.
These will show your salary credits and all your regular bill payments. Thus, if you know you’re likely to want to apply for a mortgage in the not-too-distant future. Try to make sure that you avoid any of the above pitfalls.
Take a break from gambling for a short while. Then work on presenting your bank account in the best possible light.
Your mortgage broker can help you as some lenders may ask for fewer bank statements than others. Or indeed some may not even ask for them at all.
However, even these lenders would reserve the right to request bank statements in certain circumstances. So your best bet is to be as prudent as possible in the run-up to any mortgage application.
Remember, if you do gamble, please gamble responsibly!
If you are a first time buyer in Liverpool who doesn’t know a lot about mortgages. You should get some specialist mortgage advice from a Mortgage Advisor in Liverpool.
We can guide you through the whole mortgage process and help you with your application. To get you on track so that lenders will be impressed.
Are you a budding First Time Buyer in Liverpool? Maybe you haven’t thought about Moving House for quite a while? In either of these cases you are probably asking yourself one of, or both of the following questions; “Can I get a mortgage in my situation?” and “How much can I borrow?”. These are two questions we hear regularly when providing mortgage advice in Liverpool. In this article, we explain the latter, something that over the last 10 years has changed quite a bit.
If we look back at the ’80s and ’90s, most mortgage applications were underwritten manually. This means there was lots of “human intervention” in the mortgage application approving process. You’d make an appointment with your local building society manager, and he or she would interview you about your circumstances.
They would encourage you to save with them for a while until you prove yourself to be good enough to handle credit. The manager would then grant you what was the equivalent of today’s Agreement in Principle. Following this you would receive mortgage advice and an estimation of how much they would be able to lend you.
At face value, this sounds very much like a highly personalised process with a common-sense approach. That being said, it could often lead to inconsistent decision-making. The manager had the discretion to interpret the lending manual as they saw fit. What this means is that you could possibly approach the same Building Society in a different town or city and the result would come out different.
To make sure things like this stopped happening and more importantly, to cut costs, lenders moved to automated affordability calculations. “Caps” were applied so they would lend you more than, say, 3 or 4 times your standard household income.
As the 2000s went onwards, lenders were becoming more and more generous in the amount they would lend customers. Some lenders would even offer self-certified mortgages, meaning no background checks were taken so they were taking the applicants word on how much they were earning!
Such practices of course failed, and the market crashed. 2008-2010 were very difficult years if you were trying to get on the property ladder, as the market was in a poor state. Lenders stopped lending for the time being and created a very cautious (over-corrected) lending environment.
The market eventually (and thankfully) recovered, and in 2014 the regulator launched the Mortgage Market Review (MMR). This was a brand new set of rules for lenders to follow. The old-style income multipliers which took little account of household expenditure were now gone.
Before 2014, two applicants earning the same could borrow roughly the same as each other, regardless of the little details and differences, including how much they spent each month. Then came brand 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 also analysed more harshly. So, for example, if you have high childcare costs, lots of credit commitments and a student loan, it is likely you will be offered less than your work-colleague who doesn’t have any of these things to pay for.
We still find ourselves regularly surprised by the large variances lender to lender in how much or little they will lend customers. Some lenders seem to penalise low-earners (they may only want one type of applicant) and some take pension contributions as a fixed outgoing, so would often lend the likes public sector worker with a big pension deduction less than a private sector.
If you need to maximise your borrowing capacity to obtain the home you need to buy then you’ll need the help of a trusted and experienced Mortgage Broker in Liverpool on your side. Our advisors are able to research the market on your behalf to see if anyone will lend you the amount you need.
Before you take out a mortgage you should sit down with a Mortgage Advisor in Liverpool and work out your finances together to ensure that the repayments are to the level you were expecting.
Here at Liverpoolmoneyman, we offer a free initial mortgage consultation for all customers. Contact us and we’ll get you booked in as soon as possible.
Positive news for those who served in the military, as according to Army Families Federation Defence Secretary, Ben Wallace, the current Help to Buy scheme that was designed to help military personnel get onto the property ladder has had an extension!
Originally announced back in 2014, this £200 million scheme was created as a means to boost anyone from the forces who needed help purchasing a home. Though it was meant to end in December 2019, as a token of gratitude for their commitment to serving this country, the government has extended this until the end of December 2022.
Those who have served or are currently serving in the military have access to a borrowed deposit of up to half their annual salary (the maximum being £25,000), without any interest added on. This amount can then be used to either purchase their first property or remortgage for any home improvements, such as a new kitchen or an extension.
What makes this so great, is that this means you don’t need any current savings to get onto the property ladder. Some of the money raised from the loan you’ll receive via the scheme can also be put towards other costs, such as:
Most lenders will accept the loan towards the deposit for a new home. In a better deal than other schemes, the Forces Help to Buy loan can be paid back over a period of 10 years, meaning you’re less stressed and don’t feel rushed.
No matter where you thought you stood in regard to the property ladder, if you have served your country, you are eligible to purchase your home using this government scheme.
Click here to read through more information from the Government.
Our dedicated mortgage advice team in Liverpool will be supporting you from day one. Right from your initial enquiry, right through until competition and beyond, your mortgage advisor will be there to help, ensuring that you end up with the most appropriate result for your personal circumstances.
Contact us today and see how we might be able to help you achieve your property owning dreams.
Please note, the Forces Help to Buy is not the same as the standard UK Help to Buy scheme.
The Government launched a new home buying scheme back in 2013, called Help to Buy equity loans. After the credit crunch happened, the property market slowed down for a while. By introducing this new scheme, the property market could start to find it’s way back up again. Years later, it seems to be in a much better place than it ever was before it happened.
You gain no interest for the first 5 years, which means a lot of home buyers could now be reaching their repayment date. Missing your payments will lead to an increase in interest.
You may find the help of an experienced mortgage broker in Liverpool useful if you’re reaching or are already near the end of your 5 years. Our experienced mortgage advisor may be able to reduce your monthly repayments or help re-organise some of your finances.
The Help to Buy equity loan scheme works quite simply. The Government loans the applicant up to 20% of the properties value. You won’t pay any interest back for the first 5 years, though if the value of the property goes up, then you will need to pay more back to the government.
An example of this is; if your property were worth £130,000, you could borrow up to £26,000. However, if the property suddenly were worth £150,000, the amount owed would total at £30,000. In this case it could appear misleading to some, though this same process applies the other way also. If your property dropped in value to £110,000, your total to pay back would only be £22,000.
As with most mortgages, the minimum required deposit is 5%, though higher amounts can result in better mortgage deals.
Over our years of experience as a mortgage broker in Liverpool, we have had many customers who have used the Help to Buy equity loan, but aren’t entirely sure what they signed up to when they made the purchase.
The reasons for this could vary, such as the scheme not being properly explained or the applicant getting caught up in the excitement of the home buying process. No matter the case, it comes as a shock when a letter comes through asking you how exactly you plan to pay the loan back.
Technically the Government owns a percentage in the home, seeing as the 20% is only a loan and not a gift. This is why it is in your best interests to pay it back as soon as possible. If you still haven’t paid it back after the 5 year interest free period, interest will be added on, starting with 1.75% in the 6th year. Each year after that it increases beyond that.
It’s at this point that customers struggle to keep up their monthly mortgage repayments and a majority look at taking out a remortgage to help with this.
You might find that not all lenders will accept a remortgage from a Help to Buy applicant, though it is not unheard of and is something a mortgage broker in Liverpool could help you with.
We have a large number of lenders on panel and thousands of deals to choose from. We should be able to find you a lender to remortgage with, depending on whether or not you’re able to afford it based on your current income.
When raising capital to repay an equity loan, the maximum loan to value is restricted. Despite this, a lender may still consider going up to 95%.
A large plus side here is that repaying the equity loan in full will mean that any future property value increase will only benefit you, the homeowner, as you will have paid off the governments share. Failing that, an option you could look at is “staircasing”.
This is basically where you gradually pay off the loan over a set amount of time in instalments. This should theoretically reduce the percentage in your home that the government owns. Please note that this is only possible to do in multiples of 10.
Over the years, the inflation of property prices has far outweighed the increase of wages. In order to afford a property, a lot of people opt to buy with a friend or partner. This is because the combination of income allows for the lender to offer a higher mortgage amount.
You have someone to split your costs with, making it more affordable for both parties. However, this is a Specialist Mortgage and comes with some risk. In this article we will answer some questions we often receive and shed some clarity on buying a property with a friend or partner in Liverpool.
Some lenders will allow up to four people to co-own a property at one time. If one of the co-owners stop contributing to the monthly mortgage repayments, the other owners still have a right by law to stay in the property unless the court states otherwise. It’s with this in mind, that you need to be careful who you choose to buy a property with.
Any plans to increase the mortgage down the line, require consent from all involved. With this in mind, it is also important to discuss long term plans for owning your property.
Most couples who are married or in a civil partnership, opt for to take up a joint tenancy. If one of the applicants were to unfortunately die, the property would be passed along to the other owner. This is where mortgage life insurance comes in handy, as at that point the mortgage would be repaid.
If you are looking at remortgaging the property down the line, you would also need the consent of the other applicant to proceed.
Tenants in Common is sometimes chosen by the likes of relatives or friends buying a property together. This option allows you to own the property still jointly, but it doesn’t have to be equal shares. If one party is earning more money than the other, this works out well.
You can also act individually if you are a Tenant in Common, so you could realistically sell or give away your share, without the other person losing their stake in the property.
All parties involved are liable for the mortgage repayments, whether it’s a joint ownership or they have shares. If one member stops paying, the other(s) covers the payments to prevent any debt from building up.
Any arrears made on a mortgage may stop you from getting one in the future. Think of joint mortgages like this; you don’t each own 50%, you own 100% as a collective.
It can be really difficult to remove someone from a mortgage. Lenders need to know you can pay the mortgage yourself, without any assistance from the other party.
Nobody ever buys a property with a partner, with the intention of things ending. Taking out a mortgage could be the largest financial commitment you ever make and making any changes can be difficult. Therefore, it is important to assess your personal life before agreeing to something this big.
You may be able to demonstrate to a lender that since your ex moved out, you have been able to keep up your monthly repayments. However, this does not guarantee that a lender will agree to make it a sole name mortgage.
Lenders would much rather there be a second income in the event one person being unable to afford their half. The process of removing someone involves a brand new affordability assessment, much like they would when you first applied for a mortgage.
If your lender declines your request to do so, you should get in touch with your mortgage advisor in Liverpool to see if any other lenders would agree to let you transfer into your own name.
It may also be worth your time seeing if any family members can help you out. They can often gift a lump sum to reduce how much needs to be paid, or even put themselves on the mortgage to help out.
Even if you and your partner split up and you end up moving home in Liverpool, you are still responsible for repayments. Even if you agree with your ex that they will pay the full amount, should there ever be a time when your ex can’t pay, you are liable.
You need to keep an eye on your own credit report if you are sending them money each month. Whilst you may be holding up your end, they might not be and any defaults on their name also affects your credit score.
Being tied to an older mortgage also limits your ability to borrow for any new homes you are looking to buy, as the lender will take your current repayments into account, seeing them as existing credit commitments.
It is always a risk buying a home with someone else, so you always need to go in with open eyes. It is better to both agree on a plan in advance, to avoid difficulty if things ever do go wrong.
Before you apply for a mortgage, it’s always a good idea to check on your credit score to see how it is looking. The higher your credit score is, the more likely it is that you will get accepted for a mortgage, so if it’s low, you may need to look at ways to how you can improve your credit score.
Your overall credit score can be affected by a lot of different things. For example, the more addresses that you have registered to your name can sometimes negatively impact your credit score. Once applicants realise that this is the case, they sometimes go about it in the wrong way.
As a Mortgage Broker in Liverpool, we are seeing applicants that have moved out of their parents address are leaving all of their information registered to that address and not their new rented accommodation. Leaving information such as bank statements, credit card and electoral roll information registered at a previous address can actually have a negative effect on your application in the future.
It can affect your application because when your lender searches through your credit file, there will be some sort of record that shows that you have moved to a new address. For example, it could be something as simple as a change in delivery address that could get picked up on. Your lender will notice this and it could end up having a negative effect on your credit score, so always change your address when you move.
As a Mortgage Broker in Liverpool, we know that sometimes applicants completely forget to change their address and everything is by accident. That’s another perk of using a Mortgage Broker in Liverpool, especially if you are a First Time Buyer, they will sort everything out for you and check that your application has the best chance of being accepted before submitting it with you.
We always recommend that you check everything you can before submitting your application. Things like the electoral roll and your accounts (credit cards/current accounts) can be easily changed and can make all of the difference. This mainly only affects people who are living in rented accommodation, however, there is nothing wrong with checking everything just in case. If you are moving straight from your parent’s address to a new property. You can do this once you move out.
Everything is always worth a double-check and sometimes a second opinion could help too. That’s why we think that speaking to a Mortgage Advisor in Liverpool would prove highly beneficial to you and your mortgage application.
It is very important that you know the exact date off when you moved to your rented apartment/new home and the date you moved out. This is because if you get the dates wrong, it can look like you are living in two different places at the same time.
A lender doesn’t just look at your application and decide there and then, they will go into extreme detail in order to see if you are the right applicant for them. So if you show that you have updated all of your information correctly and changed everything recently so that your application was stronger, they will be impressed by it. Having everything prepared nice and early doesn’t do any harm, it can sometimes give applicants that boost that they need!
Changing your address and double-checking your application are both really easy processes that can positively affect your mortgage application. However, if you are still struggling to get everything sorted, feel free to get in touch with a Specialist Mortgage Advisor in Liverpool at Liverpoolmoneyman, we are always happy to help.
As an experienced Mortgage Broker in Liverpool, we know that being a First Time Buyer with no mortgage experience can be hard. This is why we want to step in and offer you a helping hand. Get in touch with Liverpoolmoneyman, your expert Mortgage Broker in Liverpool today.