Step 1: Finding out how much you are eligible to borrow (if you are a cash buyer, please skip to step 4)
There are various mortgage calculators available online to help you. Using your salary and existing monthly obligations, they can provide an idea of how much you would be eligible to borrow.
Step 2: Identify the right mortgage for you
It is truly significant to find a mortgage that will suit your individual needs. Here is what you will need to consider, when you are looking for that right mortgage for you.
• Repayment options
With repayment or interest only payments, you must take into consideration and be comfortable with the way you decide to repay your mortgage. You can always combine both these methods on a part-repayment and part-interest only basis.
• Repayment mortgage
With regards to repayment mortgages, you initially pay off the amount of monies you have applied for along with the interest charge. Slowly but surely, you will pay off the amount borrowed over a fixed term.
In the early stages of your monthly payments, the majority of your payment is classed as ‘interest’. On the other hand, eventually, as the mortgage balance reduces so does the amount of interest. Thus, as you draw near the end of your mortgage term, the majority of your monthly payment is paying off the amount of money you've borrowed. Assuming that you uphold the payments, the mortgage will be repaid at the end of the mortgage term.
• Interest only mortgage
There are various interests only mortgages to choose from, but the monthly payment will only be covering the interest charged for the mortgage.
If you settle on an interest only mortgage, the responsibility lies with you to guarantee that you have sufficient means to repay the total at the end of the mortgage term. This could be by a variety of methods such as an investment plan, existing shares, an inheritance, sale of the property, or the sale of a Buy to Let property. We suggest you check with an Independent Financial Adviser (IFA) to discuss the right repayment method for you.
Further expenditure when taking out a mortgage
Deposit: In most cases, there will be a minimum 5% deposit required. For example, if you were to buy a house for £300,000, you will need to have at least £15,000 to put down as your deposit.
Solicitor fees: You will need a solicitor and/or conveyor to handle all legal fundamentals of purchasing a house, such as checking the land registry details, conducting any essential searches and changing of names on the title deeds.
In addition, your solicitor and/or conveyor will gather local information about the property you desire to purchase and the surrounding area. This is gained from the local authority to guarantee that there will be no potential nuisances that can devalue the property, for instance; new road plans or local boundary disputes.
Furthermore, your solicitor and/or conveyor will incur a variety of costs as they apply for information from the land registry and from a mixture of other sources in the case of searches. These fees will then be charged on top of their fees.
Lenders' Valuation: Your lender will also carry out their own basic survey, allowing them to assess the worth of the property, guaranteeing the value of the property will give adequate security for the mortgage. You can also choose to have a Homebuyers Survey, a more detailed report that provides more information about the overall condition of the property.
Transferring of funds: The transferring of monies via a banking/finance institution to another can also incur charges. Based on the amount you will be transferring, you will need to confirm what these charges may be.
Stamp Duty: You are required to pay the Government tax on purchase of most properties valued above £125,000.
Last but not least, you may also come across moving costs, such as packing, removal and potentially storage of your belongings before you move into your new home.
Step 3: Approval in Principle
Once you are ready to proceed, you will need to ask your lender for an Approval in Principle. This is when you find out if your lender will offer you the mortgage and will confirm how much they are willing to lend to you.
Step 4: Searching for a property that's right for you
Once you have an Approval in Principle, you will know the maximum amount you are allowed to receive a loan for thus allowing you to search for homes within your limit.
Three main factors when searching for an ideal home:
• Size (1 bedrooms, 2 bedroom, etc...)
• Type of property (flat, house, etc...)
You will need to contact Alex Crown directly and register your details with one of our trained consultants, who will listen to your every requirement and match a property that will be ideal for you. If there is nothing that catches your attention immediately, don't worry, our dedicated marketing team should find you your new home within a few weeks.
Step 5: Making an offer
When you have determined how much you would like to offer for the property, the next step is to let your personal consultant know and they will do the rest.
If the vendor accepts your offer, it will be 'subject to contract'. This means that both you and the seller have agreed in principle to proceed with the deal, but neither of you are legally bound. After the vendor acceptance of the offer, you will receive a Key Facts Illustration for your chosen mortgage deal which will then enable you can apply for your mortgage.
Step 6: Engage a solicitor and apply for your mortgage
Now is the time to choose a solicitor. The solicitor, as mentioned below will arrange a valuation report, which you will have to pay for. This report ensures the property is worth the amount you want to borrow. This is a basic valuation and may not highlight potential problems that might arise with the property. You should consider carrying out a more detailed survey.
First & Second Floor,
11-13 South Road,
Southall, UB1 1SU
T: 020 8574 0666
Step 7: Exchange and completion
First of all, before you can complete you'll need to sign the mortgage deed and the document that transfers the property over to you. Make sure that any buildings and contents insurance are in place for the exchange date.
After your solicitor has concluded all the checks, both parties are ready to exchange contracts. This means signing identical copies of the contract for sale which the solicitors exchange. You are also required to pay your deposit through your solicitor. At this point, both parties are legally bound to proceed with the transaction. If you pull out after exchanging contracts, the seller is entitled to keep your deposit.
Step 8: Being the owner of your new property
Once you've completed - Congratulations! You are the proud owner of your new home. You can now collect the keys to your new home and open that bottle of champagne!