Getting your first mortgage

Six tips to help you on your way...

House prices are rising at their fastest rate for four years according

to Nationwide Building Society*.

Whilst interest rates remain low, rising house prices is not welcome

news for many first time buyers who want to get on the housing

ladder.

Here are our six tips to securing a mortgage for your first home…

1. Pay off your debts

Banks and Building Societies are more welcoming to mortgage applicants who have no other debts,

as they are regarded as lower-risk borrowers.

Not only will clearing your debts give you a better chance of getting a mortgage, it will also give you a

greater capacity to borrow.

This is because most lenders now employ an affordability criteria (where your monthly debt

repayments are subtracted from your monthly income when calculating how much you can borrow),

instead of straightforward income multiples (where the lender multiples your gross annual salary by

say, three or four, and this determines how much they will lend you).

2. Save hard

Save as much as you possibly can. Lenders favour applicants with at least 10% of the property value

to put down as a deposit. What's more, the greater the deposit you are have, the greater access you

will have to the cheapest mortgage deals.

Make sure you save into an ISA (an Individual Savings Account) which is a tax efficient type of

account. There are two types of ISA: Cash ISAs and Stocks and Shares ISAs. Cash ISAs simply

operate as a normal savings account: you can get your money back at any time and they’re suitable

as a short term investment or savings measure.

Alternatively you can choose a Stocks and Shares ISA. This is normally for those who are seeking a

better return than cash savings accounts are currently paying and are happy to set aside their money

for at least five years. As with any investment involving stocks and shares, your ISA investment may

go down in value as well as up: there are no guarantees that you will make a profit.

3. Keep orderly financial records

Lenders want to see evidence of a consistent and reliable income, so be prepared to show your bank

statements and pay slips.

If you are self-employed, you will have to show the lender your annual accounts compiled by a

reputable accountant.

4. Address your borrowing past

Check your credit report from a credit reference agency such as Experian or Equifax before applying

for a mortgage. This sets out all current and previous borrowing you have made and shows up

difficulties a lender might identify, such as defaults, arrears and any County Court Judgments. It is a

good way of checking for identity fraud activity too.

Getting familiar with the contents of your credit report will give you a chance to amend incorrect or

unfair information by adding a 'notice of correction' to your report which lenders are obliged to

consider.

5. Make sure you are on the electoral roll

If you are registered on the electoral roll for every address that you have lived at, it will help to confirm

your identity and address history - evidence your lender will want to see. It will also potentially

improve your credit score.

Contact your local council for more information on electoral roll registration.

6. Find the right mortgage deal

Once you are in a position where you are likely to be accepted for a mortgage, it is important you find

the best deal. There are a number of mortgage lenders, each offering different products and

arrangement fees, so it can be difficult to compare mortgages on a like for like basis.

A mortgage specialist or adviser will be able to find the best deal to suit your circumstances.

Taking guidance from a mortgage expert can not only save you money, it can be invaluable if you

have been refused a mortgage or if you just fall outside the box - for example you are self-employed,

have a patchy credit rating or have lived outside the country for some time.

If you would like assistance from a Mortgage Specialist please email us at letstalk@sanlam.co.uk

This article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products. For further information contact Sanlam Private Wealth by e-mailing letstalk@sanlam.co.uk. Sanlam Private Wealth is a trading name of Sanlam Private Wealth UK Limited. Authorised and regulated by the Financial Conduct Authority.

* Source: http://www.bbc.co.uk/news/business-26368709