First time buyers can get contractor mortgages too!
As a first time buyer you may be concerned that getting a mortgage is not only difficult because of rising house prices, but also due to your contractor status. But don’t let these misconceptions stand between you and your first home. Our advisers are able to secure you a mortgage with as little as a 5% deposit and will take the hassle out of stepping on to the ladder.
Your first time buyer questions answered:
Q. Is there anything I can do to help my application succeed?
Before starting the process of purchasing a home, you will need to understand if you can feasibly afford the costs involved and work out your monthly expenses. Get to know your credit report, this will increase your chances of success when applying for a mortgage. Also make sure that you have the following documents to hand to support your application:
- A signed copy of your current contract
- 3 months personal bank statements
- 3 months business bank statements or umbrella payslips
- 2 utility bills from the last 3 months
- 2 forms of photo ID e.g. a passport and drivers licence
- Proof of your deposit
Q. I have heard about the Mortgage Market Review (MMR), will this have an impact on my application?
MMR will help you in terms of consumer protection as you won’t be able to fall in to the trap of an unsuitable mortgage as the lender will conduct far more stringent checks on your application. The experts at Contractor Financials will advise and help you prepare all the necessary paperwork in order to qualify for your mortgage so you needn’t be held back by MMR. The good news is that the service delays experienced in the early days of MMR have long been forgotten as lenders have got to grips with the new service standards.
Q. I have had a few breaks in my contracts over the years, will I be able to secure a mortgage?
Our recommendation is to not have too many breaks between contracts just before applying for your mortgage. Most lenders are happy for you to have up to four consecutive weeks off but any more than this may ring alarm bells with the underwriters. Ask your mortgage adviser if you are concerned about gaps in your contract history.
Q. How will I afford my mortgage repayments if interest rates increase over the next few years?
We want to ensure that our clients can afford their mortgage whatever the future holds so we check your mortgage affordability against interest rates of 7% to ensure that you could afford your mortgage if interest rates rocketed. If you are concerned about the impact that increasing rates may have on your expenses then you can opt for one of the many competitive fixed rate mortgages that are available at present. Speak to your adviser to explore the options. It is a good idea to have a rough idea of the deposit you can raise and repayments that you are able to make before you start the application process, use our repayment calculator to find out how much your monthly costs are likely to be.
Q. Are there any options for me if I cannot raise a 10% minimum deposit?
The Governments Help to Buy scheme is a fantastic option for first time buyers struggling to save a large deposit. This scheme requires just a 5% deposit, making it extremely appealing to first time buyers. Check out our Help to Buy page (link) for further details.
Q. I am concerned about my credit rating, will it affect my application?
There are various things you can do to improve your credit rating before you embark on a mortgage application, closing down credit cards that have no balance, paying down outstanding balances or opening a credit card if you don’t currently have any credit history can all make a difference. Even small things such as joining the electoral roll at your current address or ensuring your address history is up to date can help to make your application a success. Your adviser will able to make suggestions as to how you can improve your credit profile in order for your application to be favourably presented to lenders but you can also help yourself by signing up to a credit referencing service such as Experian so you can monitor changes to your credit profile.
Q. When do I need to get a solicitor involved?
Having your agreement in principal and solicitors in place before you view a property will definitely help to set you apart from the crowd as estate agents receive far more speculative offers than they do qualified offers. Your adviser will be able to point you in the direction of a reputable solicitor with a proven track record of delivering for our clients. Your solicitor will liaise with the lender and the vendor’s solicitor to conduct the necessary searches and surveys and ensure that the legal aspects of the sale are completed. When it is time to exchange contracts, your solicitor will hold your deposit money until your agreed completion date so choosing a firm you are happy with is essential.