First Time Buyer Mistakes | Top Ten Tips For First Time Buyers Applying For A Mortgage

Podcast Hosts:

Gemma – Host
Ifthiaker (Ifthi) – Accountant and Mortgage Broker

Introduction

Gemma:
Today, we’re sharing our top 10 tips for first-time buyers to help you prepare for a mortgage.

Q&A Discussion

Q1: Why Should I Check My Credit File?
Ifthi:
Check your credit score first. A very good or excellent score increases your chances of approval.
Things to check in your credit file:
Name – Ensure it matches your passport; avoid duplicate profiles.
Addresses – Update your current address. Banks use this for verification.
Loans, Credit Cards, Overdrafts – Ensure details are accurate.
Mispayments, Defaults, County Court Judgements (CCJs) – Correct any errors; undiscovered CCJs can block your mortgage.
Tip: Start this process early to give yourself time to rectify issues.

Q2: Why Should I Prepare a Budget Planner?
Ifthi:
Reason 1: Helps calculate disposable income to determine how much you can pay monthly on a mortgage.
Reason 2: Identifies unnecessary expenses (e.g., multiple streaming services, gym memberships, hobbies) that can be reduced.
Tip: If you want a budget planner format, contact us via comments.

Q3: Why Register on the Voters Roll?
Ifthi:
Banks use the voters register for address verification.
Being on the register can also improve your credit score.
Tip: Register at gov.uk, even if you do not plan to vote.

Q4: Why Keep My Bank Statements “Squeaky Clean”?
Ifthi:
Banks review last 3–6 months of statements.
Ensure you can explain all transactions, especially irregular ones.
Watch for:
Expensive hobbies
Gambling
Any income discrepancies from your employer
Tip: Ensure your pay matches official records, or get a letter from your employer explaining discrepancies.

Q5: Why Have Proof of Deposit Ready?
Ifthi:
Banks need to verify where your deposit comes from.
If family gIfthis help fund the deposit, provide:
GIfthi letter
Donor’s bank statements
Tip: Loans from friends/family may be considered a liability; always consult an advisor for complex cases.

Q6: Why Prepare Proof of Income?
Ifthi:
Employed: Last 3 payslips, P60, and explanations for income changes.
Self-employed / Directors: SA302 forms, tax year overview, and possibly company accounts.
Contractors: Contracts and possibly SA302 forms; ensure contracts are signed and up-to-date.
Tip: Be honest about gaps in employment or contracts; lenders value transparency.

Q7: Why Prepare ID and Address Proof?
Ifthi:
Banks usually require two forms of ID: passport and driving license (provisional if no full license).
Ensure all documents are valid and up-to-date.
Tip: Some exceptions like birth certificates may be considered; consult an advisor.

Q8: Why Speak to an Advisor?
Ifthi:
Advisors help determine if a mortgage is suitable for your situation.
They know which banks work with your profile (e.g., contractors, self-employed).
Advisors assist with planning how to manage and repay your mortgage.

Q9: Why Get a Decision in Principle?
Ifthi:
Also called agreement in principle.
Tells you how much you can borrow before making an offer.
Important: Provide truthful information; discrepancies can affect the final mortgage amount.

Q10: Why Plan for Other Expenses?
Ifthi:
Beyond the deposit, consider:
Stamp duty (if applicable)
Solicitor fees (£1,500–£2,000)
Broker fees (varies)
Valuation fees (£200–£4500 depending on property)
Moving costs, furniture, and unforeseen expenses
Tip: Budget for all additional costs to avoid surprises.

Closing Remarks

Gemma:
These tips may not apply to everyone; speak to an advisor if unsure.
Reminder: A mortgage is secured against your home or property and may be repossessed if repayments are missed.