Purchasing a Property | What You Need to Know

From everyone here at My Mortgage Experts, we hope you’re staying safe during this time. As government guidance is allowing estate agents to go back to work, this means you can start thinking about moving house or buying your first property again. Hopefully, this will be sooner rather than later.

As things are moving so fast at this time, we wanted to create an informative blog about purchasing a property. One that will hopefully explain everything you need to know. From applying for a mortgage to house insurance. And remember, even if you don’t plan on purchasing a property soon, it doesn’t hurt to plan. Plan: this is one of the best tips we can offer you.

So, without further ado, let’s get started:

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Applying for A Mortgage

If you want to buy anything you need to have the right amount of funds. Obvious, right? When it comes to purchasing a property, however, it isn’t so simple.

To buy a flat or a house will cost more than most of us will have in our bank account at one time ever. So, how does anyone buy a property at all? The answer is with a mortgage.

A mortgage is a type of loan you take out against the value of the property you’re purchasing. You can take out a mortgage to buy either land or a house or flat. We’re going to discuss the different types of mortgages on offer and the benefits available. But, the general idea is you pay back a certain amount of the loan monthly over time. How much will vary depending on the type of mortgage you have taken out.

This can sound daunting if you’re purchasing a property for the first time, right? Of course, such a big financial commitment is going to feel intimidating initially. However, there are First Time Buyer Mortgage Schemes available and Guarantor Mortgages to assist first-time buyers. Help is also at hand to guide you through the whole process by speaking with our qualified and professional Mortgage Broker team.

Deposits

Typically, mortgages are available from 95% i.e. you put in a deposit of 5% for the property that you want to purchase. The deposit funds need to be available but are only put into the transaction when completing the purchase transaction (so right at the very end).

There are also schemes available such as ISA’s to assist you with saving for a deposit.

It should be noted, that generally the higher the level of deposit, the better the interest rate offered by the lenders will be. So, therefore, if you have a deposit of 10% compared to 5%, the 10% deposit would generally attract a better deal from the lender.

It should be pointed out that during the Covid-19 pandemic; Lenders have been more risk-averse. This means that they have generally wanted to see higher levels of deposits i.e. 10-15% as a minimum. As the markets gradually return to normality, we should see the return of 95% loans in due course.

First-Time Buyer Mortgage

If you’re purchasing a property for the first time have a look at our mortgage eligibility checker. This allows you to have an instant indication on whether you’re eligible for a mortgage. Without even having to speak to someone. The decision will be based around your financial position and a financial assessment.

If you’re eligible, one of the mortgage schemes that can help you to purchase a home is Help to Buy. A lot of young people trying to break out on their own will need financial assistance to purchase their first property. This is the reality of the world today for first-time buyers.

Help to Buy is a government scheme to assist first-time buyers to get mortgages for new build homes. As long as the value of the property being purchased is below £600,000. The scheme allows a first-time buyer with a deposit equivalent to 5% of the property value to be eligible for a mortgage.

So as an example, if you had a 5% deposit you would arrange a mortgage for 95% of the property value. The Help to Buy loan scheme (if eligible) contributes a further 20% deposit to your purchase. You therefore only need to apply for a 75% loan, meaning generally a better deal and a higher chance of application success.

The remaining money is paid for by a government loan. This is an interest-free loan for the first five years. At the end of the five-year period, you will need to either repay the loan or start paying interest on it.

Please note that we have focused the information on the Government-backed scheme for those buying in England. There are different schemes available if you are purchasing in Wales, Northern Ireland or Scotland.

Please note, this is only available for new build properties. Speak to one of our experts if you need further information.

This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – check out their websites.

Home Movers

Definitely, there is positive movement in the market and a lot of activity with properties now available to view.

Again, generally, the biggest deposit that you have the better as this will generally benefit you with a lower interest rate.

Getting your finances in order and any mortgage requirements pre-agreed is sensible. Whatever the market conditions, it is really important to ensure that you are in the strongest possible position so that you can move quickly to strike a deal. We would highly recommend, complete our mortgage eligibility check or even better speak with one of our professional advisers to get your mortgage agreed in principle.

handing over keys to a new property

Life assurance

At My Mortgage Experts, we believe that it is important to protect you and your new home. You will have had to work and save for your deposit. Therefore, once you have bought your new home it is vitally important that you protect your most valuable asset. We can assist, by providing you with a full personal mortgage protection review.

Insurances to consider are, protecting your income, life assurance, critical illness, unemployment cover and home insurance. Just imagine a situation where for whatever reason yours or a partner’s income were to stop? What implications would this have? Insurance will give you valuable peace of mind, ensuring that if the worst happens, you have provisions in place to protect you.

Income protection insurance isn’t a conventional house insurance policy. This type of insurance plan is available in a variety of policies. The purpose of an income protection scheme is to cover your costs in the event your income falls. This could be due to an accident at work or becoming unemployed. This insurance policy will protect your interests and allow you to continue to repay your mortgage.

To find out more about purchasing a property, get in touch with us today:

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