Whether you are a first time buyer in Sunderland actively viewing properties or a home mover in Sunderland with your house on the market, you may have noticed that some of the larger estate agents and builders are very keen for you to use their in-house mortgage advisor and conveyancing services.
Being part of a stand-alone Mortgage Broker in Sunderland, we receive lots of feedback as to what sales tactics can be used, examples of this are;
Remember, when negotiating a purchase price, do you really want the seller of your property to have access to your personal financial situation and potentially knowing your maximum borrowing?
Depending on who you ask, renting over buying may not be favorable to you. If you are younger and your parents or other family members have a mortgage of their own, then it is much more likely that they will encourage you to take out a first time buyer mortgage in Sunderland.
These days, though, we tend to see more people renting than ever before. Many seem concerned about owning their own home. As such, we will examine the advantages and disadvantages of buying and renting in Sunderland.
Often, mortgage payments can be cheaper than rent. Of course, this is not always the case, but it can happen based on the market! Payments can fluctuate as interest rates rise and fall, which means that many choose a specific type of mortgage.
A popular recommendation is a fixed-rate mortgage that keeps your monthly mortgage payments the same at the beginning of your mortgage term. This provides stability for you and the mortgage lender.
On the other hand, when you rent, your payments will remain the same or eventually increase in rare cases. A landlord has their own mortgage, and they are in the business of making money.
Many homeowners believe that their home ownership gives them and their families a sense of stability. So, if you stay up-to-date with your mortgage payments, you cannot be removed from your home if you do not want to leave. The same cannot be said for tenants.
Whilst there may be some protection for those who are renting if the landlord wants their property back you do not really have much of a say. Sometimes you may find the landlord will give you the chance to buy before it goes on the market, which can save them time and money.
Renting is usually more flexible than being a homeowner. An example of this would be if you found a job in a new area, you are free to give notice to your landlord or estate agent, and then move elsewhere.
It would be nice if it were so simple, but if you are a homeowner, it does not work that way. You need to decide whether to sell the property. Some may even let it out and become a landlord themselves.
Buying may not be the best option for you if you like to move home quite often or are not sure how long you will be in the area. Buying a home requires long-term stability, it is more of an investment than anything else.
A landlord is responsible for any repairs that are needed on the property when tenants are living in said property. When it comes to these repairs, some landlords will be better than others, so be prepared to fix some minor repairs yourself.
Homeowners are fully responsible for their own repairs, and usually mortgage conditions require you to insure your property, which is an additional cost to consider.
Although some are so highly regarded, owning your own home will not be something everyone wants to do. If you are a young couple, there is no shame in renting together to see what it would be like living under the same roof together for a while.
It may not go the way you would like it to, and unfortunately, if things do not go well, it can be difficult to remove a name from a mortgage once you are both tied into something contractually. With renting, it will be slightly easier.
Buying a home is a huge financial commitment and not something to rush into, however, if you rent a property, you can find it much harder to save for a deposit. In the end, most people decide to buy through renting, though it all depends on the person and their circumstances.
Mortgage payments benefit you, unlike renting, which puts money in someone else’s pockets. As such, most would rather do something for themselves. Timing is the key, so always make sure you are in a strong and stable financial state before you want to buy.
The property market is unpredictable and always changing. If you bought a property and suddenly fell in value, you could understandably be disappointed. Alternatively, it can go the opposite way too and your house can go up in value.
Over the years, we have seen this happen to many different people. Having said that, history has shown that even if this happens, if you’re patient enough, the value may eventually rise again. Of course, it depends on whether you can afford to keep the property in the meantime.
A good example of this is looking at what properties sold for during the era of the Credit Crunch. Arguably one of the worst economic times of our lives, but years later, property prices were again higher and the market was booming!
You may also be in a position where you may lose money if you must sell your home at a time when the real estate market may be underperforming for reasons such as relationship breakdown or reduced income.
Before you commit to buying a property, it is worth getting in touch for mortgage advice in Sunderland before your first buyer mortgage in Sunderland. We can see how you can protect yourself from circumstances that could affect your ability to repay your mortgage.
After all, it’s not just an investment, it’s your home. The most important thing here is to find something that matches your situation.
Property inflation has overtaken wage increases over the years. For most first time buyers in Sunderland being able to afford a suitable property. They will need to buy with someone else because there are then two incomes for Lenders to take into account when calculating your maximum mortgage amount. Having someone to share costs with. You need to consider some risks to consider, and here are some situations we have come across in the past.
From our experience, some Lenders allow a maximum of four people jointly to co-own a property. In the event of one borrower stopping their contributions to mortgage payments. Any joint owners have a legal right to stay in their home unless a court rules otherwise.
Therefore, you need to be very choosy about whom you want to purchase a property. If you are going to increase the mortgage at a later date, all borrowers need to consent. It’s crucial that you make long-term plans about what might happen down the line should you end up wanting different things.
Generally, married couples or those in civil partnerships opt for Joint tenancy. If either applicant were to perish, then the property passes to the other owner. If you have taken out mortgage life insurance in Sunderland, then the mortgage would be repaid at that point also. You will need the consent of the other applicant if you want to sell or remortgage in Sunderland, in the future.
Tenants in common sometimes get chosen by relatives or friends that buy together. You will still jointly own the property, but you don’t have to do so in equal shares. The method works well if one party is making a more significant financial input than the other. If you are a tenant in common, you can choose to act individually. For example, you can sell or give away your share of the property to someone else.
All mortgage borrowers are jointly and severally liable for mortgage payments. If one of the parties stops paying, then the other/others will have to make up the shortfall to prevent the mortgage from falling into arrears. Arrears on a mortgage may stop you from getting another mortgage in the future. Think of it like this: you don’t own 50% of a property, you own 100% of it jointly.
Removing someone from a mortgage can be very difficult. Lenders will need to be confident that you can afford the mortgage payments on your own before they permit this. No one who buys a home with a partner does so with the intention of things not working out. A mortgage is a massive financial commitment, though, and making changes to it later is not always easy.
Even if you can demonstrate that you have been able to maintain mortgage payments since your ex moved out does not guarantee that a Lender will agree to your request to put the mortgage into your sole name. Lenders like the idea that there are two people to pursue in the event of arrears occurring.
To remove someone, they will carry out a brand-new affordability assessment. Precisely in the same way as they would at the point of purchase if the Lender declines the request you. You should contact a Mortgage Advisor in Sunderland to see if other Lenders would agree to your request to transfer the mortgage into your name. It can be worth talking to family members to see if they can help you out.
They can do so by replacing your ex on your mortgage or by gifting you a lump sum to reduce the amount owed.
If you and your partner split up and you leave the family home, then you remain responsible for mortgage payments with them. In a typical case even if you agree with your ex that they will make all the payments. If you are sending your partner money each month, you should keep an eye on your credit report to ensure they are paying the mortgage.
If they receive a default, then it will also impact your credit score. If you are connected to an old mortgage, then the payments for that mortgage will be considered if you subsequently want to buy a new home of your own. That will mean lenders might not lend you as much as you would like. Buying a home with anyone is a risk, so you need to go into it with your eyes open.
It’s always better to agree on what would happen to the house should things not work while you are all still getting along well!
Mortgage Protection Insurance is an umbrella term that encompasses different types of cover. The aim is to protect borrowers from events that could affect their ability to keep up with mortgage payments. When connected to a mortgage, they provide peace of mind and a sense of security to the borrowers.
There are generally two types of life cover; “Whole of Life” or “Term Assurance.” The whole of Life cover is guaranteed to pay out a lump sum on death, whenever it occurs. Term Assurance pays out if you die within a specified term of years.
There are also different types of term assurance – for example, “level,” “increasing,” or “convertible.” The type most commonly used as mortgage protection these days is “Decreasing Term Assurance.”
If you look at linking this to a repayment mortgage, the sums assured reduces at roughly the same rate as the mortgage balance. Because the risk to the insurer diminishes over time, the premiums are generally cheaper than other types of life cover if the policyholder dies within the term.
Then the sum assured should be enough to pay off the outstanding mortgage balance. Getting this should ensure the borrower’s dependents do not get left with a debt they might not otherwise be able to manage.
Some people say that life cover gets taken for the benefit of other people. Because, sadly, you won’t be around to see any interest.
However, these days, many people in Sunderland survive conditions that once might have been fatal. Nevertheless, while undergoing treatment and recovery, it could affect your ability to meet your financial commitments. Leading to the development of Critical Illness cover in Sunderland.
Working in a similar way to Life Assurance, in that gets taken for a specific term of years. It can also have different options, such as level/increase.
They get designed to pay out a lump sum and taken on a decreasing term—basis in line with the reduction of your mortgage balance. The key is that the benefit gets paid if you fall victim to one of several specified critical illnesses.
It will then pay out whatever the long-term prognosis of that illness. The type of illnesses covered varies for each provider. In general terms, insurers usually cover between 40 – 50 specified conditions, including cancer, heart attack, and stroke. Pay-outs depend on meeting the required level of seriousness of the particular situation suffered.
The life companies all work to at least the pre-designated clinical definitions as prescribed by the Association of British Insurers.
What we mean is they can’t just arbitrarily decide that you’re not ill enough. Hopefully, if your treatment is successful, it means that you can benefit by no longer having a mortgage to pay after your illness.
In practice, many companies will offer Life and Critical Illness Critical cover as a combined policy. Usually, a pay-out on the “first event,” i.e., whatever happens first, either death or severe illness. They can also get written on a single or joint life basis.
Whereas Life and Critical Illness cover pay out a lump sum, “Income Protection” pays out a monthly amount. They got designed to replace your wages in the event of you being unfit to work in Sunderland. Unlike Critical Illness cover, there are no restrictions on the illnesses or injuries covered.
The only factors being whether they make you unfit to work. There are, however, restrictions on how much you can cover and how quickly benefits would start to get paid because the insurers want you to have an incentive to return to work rather than being better off on sick.
Typically, the most you can cover would be approximately 55%-65% of your income. Benefits would begin to get paid after a “deferred period.” Usually, it equates to the length of time you would receive sick pay from your employer.
Benefits would continue to get paid for as long as you remain unfit to work. Or until the policy term ends, whichever comes first. However, to make premiums cheaper, most companies offer a “budget” option whereby benefits would get paid for a shorter period.
Usually between 2-5 years – to at least allow you to make alternative arrangements. In case it looks like you’ll get incapacitated for longer than that.
Like Life and Critical Illness Cover. These policies are underwritten based on your health and lifestyle at the time you apply. All income protection policies get written on a single life basis.
Similar in many ways to Income Protection, you are covered by these policies if made unemployed. Benefits get usually linked to your mortgage and other costs (rather than necessarily your wages). It would usually be paid one month “in arrears” after a successful claim.
These policies only get underwritten at the time of a claim. Rather than at the outset, which can sometimes mean there can be some confusion/delay as to whether demand would get met.
They are a useful safety net if you get made long-term unemployed. But be sure to check the details of how/when any unemployment benefits would get paid out. As it may be that you would have returned to work before any monies become due.
Probably the least common of the “mortgage protection” type policies. However, these can often be valuable, particularly for those with young families in Sunderland. These plans can get taken to cover Life and Critical Illness and get underwritten on the application.
Unlike the traditional forms of policy or instead, pay out a lump sum. The covers would pay an annual or monthly income for the remainder of the term of the plan. Thus, it can replace the income of the primary breadwinner for several years.
Dependent upon a particular client’s circumstances. Because of this would usually be written on a level or basis. Or an index-linked basis designed to keep up with inflation.
There’s an adage that says you can never have too much insurance whether you are a First Time Buyer in Sunderland. A Buy to Let Landlord in Sunderland, or ready to Remortgage in Sunderland, looking into insurance is always hugely beneficial.
Many people have different types of policies, and it would be wrong to think of these as an “either/or” choice. You can have more than one kind of Mortgage Protection Insurance. However, in the real world, affordability plays a massive part while it would be fantastic to cover every type of Mortgage Protection Insurance.
A good Mortgage Advisor in Sunderland like us will sit down with you and tailor the type of cover to be the most suitable combination to your family’s priority and budget.
If you do take more than one policy, your Mortgage & Protection Advisor in Sunderland, typically, we would usually place all the cover with one provider. To help save you the additional policy administration charges which individual policies carry.
One of the most common mortgage questions is ‘How Much Can I Borrow For A Mortgage?’ Here information is provided on affordability assessments and how they are applicable post-2014.
Mortgage were manually assessed before the days of credit scoring, normally by a local building society manager. As time went on, lenders moved towards a more uniformed approach with income assessments to be able to be more consistent. Maximum lending ‘caps’ emerged from this meaning customers were restricted from borrowing more than 3 or 4 times their annual income.
These income multipliers started being more and more generous and we were starting to see many pitfalls in the 2000’s where lenders allowed customers to ‘self-certify’ incomes with no background checks such as payslips as evidence.
Following this everything started going wrong in the Mortgage Market and post-financial crisis lenders over-corrected and from such it became much more difficult to obtain a mortgage.
The Mortgage Market Review emerged after the market finally recovered from the Credit Crunch and brought in new guidelines for lenders along with new affordability calculators.
These new calculators pulled apart applicants expenses and looked deeper into spending habits and net disposable incomes. This meant Bank statements were scrutinised more closely to ensure unaffordable mortgages were not approved. For example, childcare was now taken into account.
Although lenders have made it harder from past mistakes happening, there are quite a few lenders out there. They compete on both price and lending criteria, as a result of this there are multiple variances between each lender in terms of maximum borrowing capacity. This is great for customers because if one lender doesn’t accept, another lender probably will. For example, some lenders will take into account state benefits such as tax credits for a mortgage, whereas others are more generous for self-employed mortgages.
With the Mortgage Market Review in place the old-style income multipliers were long in the past and replaced with a much more forensic view of how mortgage applicants managed their money on a monthly basis.
There is still a cap in place but spending habits are looked over. For example, if you have high childcare costs, lots of credit commitments and a student loan you will be offered less than your work-colleague who doesn’t have any of that expenditure.
It still surprises us on a daily basis on the differences lenders are willing to offer. Some seem to penalise low-earners, some take pension contributions as a fixed outgoing and so on. So it’s not always straightforward. If you need to maximise your borrowing capacity then you’ll need a Mortgage Broker on your side who is able to research the market and lenders to see who is willing to lend the amount you need.
If you are looking to be a first time buyers in Sunderland, then before you start your mortgage application you should make sure to put some time aside to sit down with your Mortgage Advisor in Sunderland and work out your financial situation to ensure that the repayments feel comfortable to you.
For first time buyers in Sunderland hurdles in mortgage, acquisition is something often faced by lots of customers, and they are not impossible to deal with either. Here is a list of 5 common problems people may encounter when looking to obtain a mortgage in Sunderland.
Childcare fees are not a reason per se for a mortgage to be turned down, rather they tend to reduce the amount a mortgage can offer.
One thing that needs to be noticed is that when parents or guardians return to work and pay for childcare, they have to monthly dedicate hundreds of pounds. Lenders take them as a liability similar to car loans.
If childcare fees are not to be paid, and still the income is low, the guardian or parents might still not get as much amount as other applicants. However, this benefits by being considered as tax credits.
If you seek mortgage advice in Sunderland, you will come to know that such lenders exist who don’t count childcare fees as outgoing funds, resulting in higher chances of mortgage acquisition.
If things don’t work out in a relationship and you decide to go for separation or divorce, things tend to get tough when it comes to your monthly mortgage repayments.
Normally we get these three questions when people seek mortgage advice in Sunderland:
The answer to all of the above can be yes, but you will need expert Mortgage Advice in Sunderland. If you end up receiving maintenance, this can sometimes get used as part of the assessable income for a mortgage.
You would be happy to know that almost all types of benefit incomes are considered as incomes and include pension or eligibility for pension, disability benefits, working tax credits, and child tax credit.
To take advantage of such opportunities, all you need is to seek out mortgage advice in Sunderland and you will be good to go.
This one comes up a lot, but it is usually easy enough. Some Lenders need you to have been in work continuously for a certain period, but others don’t. You can even get a mortgage if this is your first job. If you are due to start a new career soon, then you may be able to get a mortgage if you have a signed contract and job offer letter.
Gaps in employment can be a problem with some Lenders. Probationary periods tend to be ok, in any case.
Anit-Money Laundering precautions are pretty strict these days. All Lenders will need you to evidence your deposit, and you will get asked to prove where the money came from. Your Solicitor and the Estate Agent you are buying from may ask you for this too.
Cash is a big no-no. Any significant cash deposits into your Bank will question, and your application may get rejected.
It is possible, in fact, regular, for some or all of the deposit to come from a gift. The person gifting you the money will need to confirm in writing that it is a gift, not a loan.
All the content provided above is for reference purposes only, and does not constitute mortgage advice.
When you begin the process of looking for a mortgage in Sunderland, you will soon realise that there are a wide variety of different options available. By enquiring for expert mortgage advice in Sunderland, we’ll help you to determine which one is right for you.
Below you will see a list of the most popular types of mortgages available on the market. If you have any questions regarding the mortgage options below, do not hesitate to contact our fantastic team of mortgage advisors in Sunderland.
A fixed-rate mortgage means that your mortgage payments are going to remain consistent for a particular duration. You are able to choose how long you fix your payments for, with this typically being around 2-5 years.
This means that no matter what happens with inflation, interest rates, or the economy, you know that your mortgage payment, which will most likely be your biggest outgoing, will not change.
When you have a tracker mortgage, this means that your interest rate will follow alongside the Bank of England’s base rate. In this situation, the mortgage lender that you are with will not be setting the rate themselves.
You will be paying at a percentage above the Bank of England base rate. For example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.
Home buyers who are looking to take out a repayment mortgage will have a combined amount of capital and interest to pay each month.
If you are able to maintain those monthly mortgage payments, he mortgage balance is guaranteed to get paid off at the end, with you owning the property outright.
A repayment mortgage is generally considered to be the most risk-free way to pay your capital back to your mortgage lender. Early on it will mainly be the interest that you are paying and your balance will reduce very slowly, especially for homeowners with say a 25+ year term.
This will change over time and in the last ten years or so of your mortgage, your balance will be reducing at a much quicker rate, as you will be paying back more capital than interest.
While you will find that a lot of buy to let mortgages in Sunderland get set up on an interest-only basis, it is much difficult for a residential home buyer to take out an interest only mortgage on their home.
Typically, you will find that it is much less likely for a mortgage lender to offer interest only residential products to customers, though there are a selection of circumstances where this type of mortgage may still be applicable.
These tend to include downsizing when you are older or have other investments that you will use to pay the capital back. Mortgage lenders can be quite strict when it comes to offering these products now, and the loan to values are a lot lower than they used to be.
With an offset mortgage, your mortgage lender will go ahead and set you up a savings account that will run alongside your mortgage account, to help you offset the balance and reduce the interest paid overall.
For example, let us say you have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you only pay interest on the difference, which in this case would be £80,000.
It is for this reason that an offset mortgage could be a truly efficient way of managing your money, especially if you are a higher rate taxpayer.
If you like the sound of any of the mortgage options that have been mentioned above, have any other questions relating the mortgage process or would like to get the ball rolling on your mortgage journey, please do get in touch.
In booking your free mortgage appointment online, you’ll benefit from speaking to a trusted and qualified mortgage advisor in Sunderland, who will look to guide you through the process as best they can, finding the most suitable mortgage product to fit your circumstances.
With any mortgage that you take out, you will be paying a combination of capital (the balance) and the interest (at a percentage of the remaining balance). You may actually be able to reduce the amount of interest you pay per month, by taking out an offset mortgage in Sunderland.
When a mortgage applicant takes out an offset mortgage in Sunderland, their mortgage lender will open a savings account for them, in their name, to run alongside their mortgage term. This savings account will not pay back your mortgage balance, but instead will lower the amount of interest that you pay.
So if we were to say, for example, that you had a £100,000 mortgage to pay off and put £20,000 into your savings account, you’d still have that £100,000 mortgage to pay per month, but you only pay interest on £80,000.
The amount of interest that you will have to pay is generally calculated at a percentage of your mortgage balance, which is what increases the overall cost. In short, the more interest you offset into your savings account, the less that you have to pay back on interest overall.
This of course, can save you a lot of money.
As mentioned above, the money that you deposit into your savings account will offset against the interest, reducing the amount that you pay overall. Unlike a standard savings account, you will not be paying tax on your savings, which can be beneficial for higher rate taxpayers.
A possible downside to this type of mortgage, is that your savings will not see any growth either. Interest will not be earned on any of the savings that are linked to your offset mortgage in Sunderland.
Even with this in mind, a potential offset mortgage applicant may not be deterred, especially with the potential for savings by offsetting the interest against the mortgage balance. Additionally, the flexibility of the account is another positive.
Using the aforementioned example of a £100,000 mortgage and £20,000 in savings, if you for any reason needed to dip into your savings, you have the freedom to do so. It’s important to remember though, that you would be paying interest on a higher balance amount.
So whilst with the savings in you would be paying interest on £80,000, if you drew out £10,000 to use, you would be paying interest on £90,000 again until you deposited further funds back into your savings account.
You will still have the responsibility of maintaining your monthly mortgage repayments, you would just have less interest to pay per month.
If you managed to offset our entire balance towards the end of your term (maybe through a combination of work bonuses and an inheritance helping you to achieve this), you would still be responsible for the repayment side of things, until the end of your mortgage term.
As mentioned earlier on, your monthly mortgage payments will be a combination of interest and capital. Whilst offsetting your whole mortgage balance would effectively reduce your interest rate to nought, the capital will still remain and require payment.
Depending on your mortgage lender, you may be able to repay your mortgage by a specific additional amount each calendar year. As a general rule of thumb, you can repay up to 10% per year, though you should always ask your mortgage lender prior to doing this.
Overpaying by too much per year can result in you owing an early repayment charge to the mortgage lender.
Whilst there may be a limit on the amount you are able to overpay on the mortgage balance, you are free to deposit as much funds as you would like to into your savings, whenever you see fit.
There is a lot to consider when dealing with an offset mortgage, as to whether or not it is the most suitable mortgage option for you. This can be quite a difficult decision, especially if you are applying for a first time buyer mortgage in Sunderland.
Really, it’s all about weighing up the positives and negatives. As said previously, this will be beneficial to higher rate taxpayers because they can deposit savings tax-free. Again, they are also very flexible, allowing you to deposit and withdraw funds at any time.
Another positive, especially for a first time buyer in Sunderland, is that someone else may have the option of offsetting against your mortgage. This means a family member could help you lower your interest rates, though this varies from lender to lender.
On the other hand, offset mortgages in Sunderland usually have higher interest rates than other mortgage deals that could be available to you. You are more or less paying a premium for a flexible mortgage type with the ability to offset against the interest.
Additionally, as touched upon above, you won’t be earning any interest on those savings as you would with a regular savings account. Furthermore, whilst you could offset against the interest if you come into more money, you could also just overpay your mortgage to reduce the balance.
There are many different reasons as to why it could be a good or bad idea for a home buyer. At the very least, you need to pay in a good amount into your savings account for it to be worthwhile, especially when it could cost a good amount to set up in the first place.
Book your free mortgage appointment and talk to a trusted mortgage broker in Sunderland today, where you will benefit from expert mortgage advice in Sunderland on the topic of offset mortgages and how they could work alongside your mortgage journey.
So now you’ve saved up for your deposit, and now it’s time to get prepared for a mortgage! We’ve compiled a list of some helpful Mortgage Advice in Sunderland, to ensure you’re as mortgage ready as possible.
The first thing you should always aim to do is get an up-to-date credit report, even before you come to a Mortgage Broker in Sunderland for mortgage advice. It’s a good idea to pay off any outstanding payments you have, even if you’re holding off based on matters of principle. This way, you’ll have less going against you, increasing your chances of getting a mortgage!
A good tip is to make sure you’re on the voter’s roll, as that has a positive effect on your credit score. Closing down old credit cards also seems to help. Your Mortgage Advisor in Sunderland will run through your credit report in the early stages, advising on what you could do to make sure your credit score looks great!
At the start of your home buying process, you’ll be asked to provide some photo ID. Our customers usually bring a driving license or passport to help with this. Your driving license can be quite handy for your address, too, although you can only use it for one of the options, so if you’re using it for photo ID, you’ll need something else to assist with proof of address. Any non-UK nationals now residing in the UK will need to show us a copy of their Visa also.
You’ll also need some documents that evidence where you live. The normal go-to for these is a utility bill or original bank statement that has a date of the last three months. Alternatively, as mentioned above, if you’re using a passport for photo ID, you can use your driving license as proof of address too.
Your bank statements should evidence your income and regular expenditures. It’s preferable if you don’t gamble leading up to this, as the lender may hold this against you. The same goes for going past overdraft limits and letting direct debits bounce – This is all about getting prepared.
Most lenders will ask to see your bank statements, as they like to be confident that you take your finances seriously. The bank statements usually needed are the ones that show your salary going in and your bills going out.
You will have to prove you have the funds in place for the deposit and evidence this for anti-money laundering purposes. It’s always best practice to limit moving money around your various accounts, as it makes evidencing the audit trail more difficult. Lenders prefer to see your savings building up, so you’ll need to account for any large amounts that have been transferred into your accounts recently.
Nowadays, deposits are gifted by family members and are the most popular way forward for first time buyer in Sunderland. These need to be also evidenced, with the “donor” needing to sign a letter confirming it’s non-refundable.
The most important thing when it comes to affordability is proving your income. This is often your last three months of payslips if you’re employed, with some lenders needing to see your most recent P60. Lenders may also consider regular overtime, shift allowance, bonuses, and commission. If you have more than one employer (maybe you have a part-time job or are self-employed), lenders will also accept earnings from those.
These days, many applicants are self employed in Sunderland and seeking fast and friendly Mortgage Advice in Sunderland. Self-employed applicants will need help from their accountants to request their last 2-3 years’ proof of earnings from the Revenue. Our Mortgage Advisors in Sunderland can talk you through what to download from the Government Gateway if you’re in control of your accounts.
It’s always a good idea to do your homework and write down an estimate of what your outgoings might be after you move to your new home. It can help you work out how much your council tax and utility bills will be, plus regular expenditures like food and drink. It’s also able to show how much disposable income you’ll have available to pay your mortgage. We’ll send you our version of a budget planner before we go forward with our appointment, which hopefully can help you with this.
As you can see from all of the above, it’s not easy to get prepared for a mortgage, although it’s still achievable! If you put in the hard work from the start, staying patient, and being careful, things are a lot more likely to go your way!
A gifted deposit can either be a portion of the full amount of the deposit that is gifted to you, with an agreement that it is not a loan and you don’t need to repay the money.
Gifted Deposits are useful when you can afford your monthly repayments but can’t afford the initial deposit. The more gifted deposit available, the better the rates you could possibly get from a lender.
This can also be helpful if you’re on a lower salary and can afford the monthly mortgage repayments but are having trouble saving your initial deposit.
Generally speaking, it is your parents who can gift you the deposit. This includes both birth and adopted parents, as well as carers (dependent on the lender). You may see this referred to online as the “bank of Mum & Dad”.
There are other potential family members who could also be considered when looking at utilising a gifted deposit. The options here vary between lenders so require a lot of care when trying to find the right mortgage lender.
We find that clients often don’t have a clue that they can actually have help with a mortgage from their parents, or don’t feel like they can go to them for help. In truth, most parents are more than happy to help their children find their footing on the property ladder.
Statistically, taking out a mortgage is more beneficial than renting, due to the potential of paying less per month. The deposit can regularly come from inheritance, although parents have been known to gift it earlier on in life if they already have a substantial amount saved or have released a certain amount of equity from their home.
The majority of lenders won’t accept a loan as a means of paying your deposit. This is because it leaves the lender uncertain that you’d have enough disposable income to pay back both the loan and the mortgage at the same time.
There is no maximum limit on the amount of gift you can receive although there have been known lenders that insist you put in at least 5% deposit from your own funds.
Those who would benefit the most from this tend to be first time buyers and home movers. It can also be handy when in conjunction with the Help to Buy Scheme, as the required 5% deposit, depending on the lender, can be paid via gifted deposit.
For the most part, all lenders will require a gifted deposit form. Depending on the lender, you may be asked to provide additional proof and ID (things like donor ID or bank statements).