MORTGAGES
First-time buyers
Navigating the road to home ownership can be overwhelming, particularly for those stepping onto the property ladder for the first time. Roxburgh Financial Services is here to guide you through every step of acquiring mortgage advice that suits your unique situation.
Here’s a streamlined view of the steps you’ll need to take to own your dream home.
Laying the foundations with a deposit
The initial step towards home ownership involves determining the amount you can dedicate as a deposit for your new home. A substantial deposit opens the door to a wider selection of mortgage offers and secures lower interest rates, reducing monthly repayments. Typically, mortgage lenders require a minimum of a 10% deposit. However, the landscape of mortgages is broad, with some lenders offering mortgages for as little as a 5% deposit.
For those able to afford it, amassing a deposit of 25% or more places you in a favourable position to access the most competitive mortgage deals on the market. It’s advisable to start saving for this deposit as early as possible to maximise your options.
Securing your mortgage
For most aspiring homeowners, obtaining a mortgage is a crucial step. The array of available mortgage types can seem daunting – from repayment mortgages, where you pay back both the interest and the principal amount, to interest-only mortgages, where you only pay the interest during the loan term.
This is where Roxburgh Financial Services can help you find the right mortgage. Our team of seasoned experts takes the time to understand your specific needs and financial situation. We’re dedicated to demystifying the mortgage process, explaining your options clearly, and guiding you towards the mortgage solution that best aligns with your goals.
Understanding mortgage affordability
At the heart of securing a mortgage is the principle of affordability. It’s not just about how much you wish to borrow; it’s fundamentally about ensuring you can maintain the financial commitment over time. This begins with a comprehensive affordability assessment, a crucial step designed to protect both you and the lender by confirming your capability to meet monthly mortgage payments without strain.
Loan-to-income ratio
The loan-to-income ratio is one of the first metrics considered in the mortgage application process. This ratio is a simple calculation where the amount you intend to borrow is divided by your annual income. Traditionally, lenders cap borrowing at four and a half times your yearly earnings. However, this is not just a bureaucratic hoop to jump through—it’s a safeguard ensuring that homeownership brings joy rather than financial strain.
Affordability assessment
Beyond the loan-to-income ratio, lenders undertake what’s known as an ‘affordability assessment.’ This rigorous evaluation goes beyond mere numbers; it’s a holistic review of your financial health, considering both your income and outgoings. The assessment aims to paint a detailed picture of your financial landscape, considering fixed outgoings and living costs alongside your income.
Stress testing
A unique aspect of the affordability assessment is the ‘stress test’. Lenders project future scenarios to gauge how well you can keep up with mortgage payments under changing conditions. This could include shifts in interest rates or changes in your personal circumstances. It’s about ensuring resilience in your financial planning, offering peace of mind that your dream home remains a haven of stability, regardless of what lies ahead.
Proving your income
Your income is a pillar of your mortgage application, proving your borrowing capability. For employed applicants, documentation like pay slips and bank statements typically suffice. However, self-employed individuals face a more nuanced process. In these cases, lenders require a more detailed examination of finances to understand income patterns and sustainability. This thoroughness ensures that all borrowers are equitably evaluated on their actual ability to manage a mortgage.
Impact of outgoings
It’s not just about how much you earn but also how much you spend. Your outgoings play a significant role in determining how much you can borrow. Lenders will evaluate your fixed expenses and ask for estimates of living costs to ensure that taking on a mortgage won’t overextend your financial commitments. This assessment aspect emphasises the importance of balanced financial health—not just for securing a mortgage but for maintaining comfort and security in your new home.
Understanding mortgage costs
The first step in your home-buying journey involves securing a mortgage, which involves various fees. A key expense is the mortgage arrangement fee, which a lender charges for setting up your mortgage. This fee varies depending on your chosen mortgage deal.
Additionally, you might encounter a valuation fee, where the lender assesses the value of your prospective home to ensure it’s worth the loan amount. Our team at Roxburgh Financial Services guides you through these costs, helping you find a mortgage that fits your financial landscape without unnecessary expenditures.
Property surveys
While not legally required, investing in a property survey can protect you from unforeseen expenses after purchase. There are three main types of surveys: the basic condition report, the homebuyer report for newer buildings, and the comprehensive building survey for a detailed evaluation.
Choosing the right survey depends on your needs and the property’s age and condition. Our experts can advise on which survey best suits your situation, potentially saving you from costly repairs down the line.
Solicitors’ costs
The legal aspect of purchasing a home shouldn’t be underestimated. A property solicitor or conveyancer will manage the contract, Land Registry, and Land and Buildings Transaction Tax charges, essential elements of your property transaction. Although it might seem like an area to cut costs, the expertise of a professional solicitor is invaluable. At Roxburgh Financial Services, we can recommend trusted solicitors who will streamline the legal side of your home purchase.
Making an offer
Finding your dream home is an exhilarating experience, followed by the crucial step of making an offer. This process involves communicating your proposed price through the estate agent to the seller and demonstrating your readiness to proceed, often via your lender’s ‘Agreement in Principle’ or ‘Decision in Principle’.
Being a first-time buyer puts you in a favourable position to negotiate, as you are not part of a chain, making you an appealing prospect to sellers.
Securing your mortgage
The adventure begins when your offer on a dream home is accepted. Your next move is transitioning from an ‘Agreement in Principle’ or ‘Decision in Principle’ to securing a formal mortgage offer. This stage typically unfolds over four weeks, during which the lender meticulously assesses your financial credibility and documentation.
Roxburgh Financial Services is your partner, ensuring you present a solid case to secure your mortgage swiftly.
Conveyancing process
Upon securing your mortgage, the conveyancing process commences. This legal procedure encompasses everything from paying Land and Buildings Transaction Tax and engagement with the Land Registry to the financial transactions required to seal the deal. It’s a complex phase that is the backbone of the property transfer process.
Our team at Roxburgh helps decode these complexities, providing clarity and guidance through each step.
Exchange of contracts
Entering the contract exchange phase signals a pivotal moment in your property purchase venture. Here, the agreement solidifies into a legally binding commitment, necessitating the deposit payment, typically 10% of the property’s value. Roxburgh Financial Services prepares you for this significant milestone, ensuring you understand the implications and are ready for the commitment.
Completion
Completion day marks when you can call the property your own, with keys in hand and a future to build within its walls. This final step involves the transfer of the remaining funds, a process where precision and timing are paramount. Roxburgh Financial Services supports you up to and beyond this point, aiming to make the completion seamless and stress-free.
Roxburgh Financial Services - Your partner in home ownership
At Roxburgh Financial Services, we’re committed to making your dream of home ownership a reality. Our expert advisers offer personalised mortgage advice tailored to your circumstances. We pride ourselves on our ability to simplify complex processes and provide you with the clarity and confidence needed to make informed decisions.
Buying a home is a significant milestone, and it can seem daunting, especially for first-timers. However, with Roxburgh Financial Services by your side, you’re not just gaining a service provider but a partner dedicated to helping you achieve your home-buying aspirations.
Are you ready to take the steps towards owning your first dream home?
Contact Roxburgh Financial Services today and set the foundation for your future. Together, we will explore your mortgage options, pave the way to securing your ideal home, and turn the dream of home ownership into your reality.