Mortgage Advice

Top tips for getting your first mortgage

by John Ellmore, Director of Know Your Money

For many people, buying their first home is a life event to be remembered forever. However, for those who are starting out, buying a first home can be a confusing minefield of legalistic and financial jargon, particularly if you are looking to apply for your first mortgage. So, to help guide you through the mortgage maze, here are a few crucial things to bear in mind….

Hold off on the job move

Lenders tend to want to see a consistent financial pattern in your life. A crucial part of this is proof that you have been employed in the same job over a period of several months — usually 3 to 6. So, if you’ve just got a job offer, consider holding off on moving until everything has gone through. However, if you’re still in the probationary period of a new job, you’re not completely exempt from getting a mortgage – it just means that you’ll have to conduct some thorough research into which lenders are willing to lend before your probation is over.

Compare options

It almost goes without saying, but as with any financial endeavor, knowledge is power. After ascertaining where you lie in the market, begin comparing different lenders and their rates and fees. It is definitely worth spending time comparing different providers before you even begin considering how much you need. Comparison sites are a great place to start, as they can gather information about numerous mortgage options, presenting them in an easy-to-read table, so all you need to do is choose the right option to suit your needs.

Apply for a mortgage in principle

A Mortgage in Principle (MIP) is a great example of jargon that may make prospective new buyers confused and put off before they even get started. 28

The same document is also referred to by different lenders as Decision in Principle (DIP) and Agreement in Principle (AIP).

It’s actually a straightforward concept: simply put, it is a statement, in principle, from a lender that declares they are prepared to lend you a certain amount based on the initial financial declaration you provide. However, it’s important to remember that a Mortgage in Principle is not a mortgage offer, nor is it a guarantee of one; it’s an indication that you could be eligible for one if you go on to pass the full mortgage application.

Check your credit score

It is vital to understand your credit score when applying for your first mortgage; this can be obtained from credit reference agencies such as Experian or Equifax. Having a less than perfect score could hinder your application, as lenders will see it as an indication as to how you manage debt. That said, it’s not impossible to get a mortgage with a lower credit score, it will just mean you have to be prepared to be questioned about your financial history, or they may require you to provide a guarantor. Being prepared and understanding your credit score will give you a good idea of where your mortgage application is likely to be accepted, so don’t delay and find out your score ASAP.

Ask for advice

If you’re unsure about your mortgage options, it’s worth speaking to a mortgage adviser. Whilst they charge for consultations, they offer guidance through the application process, a comprehensive explanation of costs and final recommendations as to which mortgage option best suits your needs. So, remember if you are struggling, you don’t have to muddle through alone.