To assist first time buyers in York, we have outlined the 10 steps involved in the mortgage process. This comprehensive guide is designed to provide you with the necessary information and preparation for your upcoming mortgage journey.
Here are the 10 steps involved in the process of purchasing a home and obtaining a mortgage:
As a first time buyer in York, you have taken a major step in purchasing a home and securing a mortgage. This can be a daunting experience, especially if you are unfamiliar with the process. That’s where we come in. As a dedicated mortgage broker in York, our goal is to take the stress out of the process and help you secure a favorable mortgage deal for your first home.
When you reach out to us, we’ll schedule a free initial consultation with one of our experienced mortgage advisors in York. During this consultation, we’ll gather your information and understand your goals, before starting the process. Let us help you make this exciting step a smooth and stress-free experience.
During your free mortgage appointment, your dedicated mortgage advisor in York will conduct a mortgage affordability assessment. This evaluation involves reviewing your monthly income and expenses to determine if you can afford the monthly mortgage repayments for the amount you wish to borrow.
This assessment is critical, as it helps us ensure that you are able to afford your repayments and avoid the risk of default and potential repossession. This is something that both the lender and we strive to avoid.
Typically, the lender will conduct their own affordability assessment, but our initial check will save time for everyone involved, including the lender, us, and most importantly, you. It also helps prevent any potential declined applications due to affordability issues.
As part of your free consultation, obtaining a Mortgage Agreement in Principle is the next step. If you’ve been researching mortgages before seeking first time Buyer mortgage advice in York, you might have come across various names for this, such as ‘Decision in Principle’, ‘Mortgage in Principle’, or the abbreviations ‘DIP’ and ‘AIP’. Regardless of the name, these all refer to the same thing.
A Mortgage Agreement in Principle serves as proof that you have cleared a lender’s initial credit assessment, either through a hard credit search (which leaves a record) or a soft search (which does not leave a record).
This agreement is not a guarantee of mortgage approval, but it is a crucial step towards your ultimate goal. Having this document also demonstrates to a property seller that you are sincere in your intentions, potentially leading to better negotiation opportunities. An AIP typically lasts 30 to 90 days and can be easily renewed if it expires. Our team can usually provide you with an AIP within 24 hours of your initial appointment.
Having secured an Agreement in Principle, the next step in your home buying journey is to find a Conveyancing Solicitor, also known as a Conveyancer. This professional is responsible for handling the legal aspects of transferring ownership of the property from the seller to the buyer.
Your Conveyancing Solicitor will be responsible for several key tasks, including reviewing and negotiating contracts, providing legal advice as needed, conducting local council and authority searches, working with the Land Registry, and finally, transferring the funds needed to purchase the property. Given the critical role that this professional will play in the process, it’s important to choose wisely.
It’s worth noting that there are two types of Conveyancing professionals: Licensed Conveyancers and general Solicitors. Licensed Conveyancers are specialists in property law but may not be equipped to handle more complicated legal issues. On the other hand, general Solicitors offer a full range of services, but their services may be more expensive. While your mortgage advisor in York may not offer these services in-house, they have a list of trusted companies that they can refer you to.
You have successfully taken several crucial steps in your journey towards homeownership. After speaking with a mortgage broker in York, passing the Mortgage Affordability Assessment, and finding a Conveyancing Solicitor, you now have an Agreement in Principle in hand. This agreement, which confirms that a lender is willing to provide you with a mortgage for a certain amount, puts you in a much stronger position as you move forward to make an offer on the property you have your eye on.
When making your offer, it’s important to keep in mind that you don’t want to offend the seller by making an offer that is too low. However, don’t hesitate to negotiate the price. Having an Agreement in Principle in hand demonstrates to the seller that you are a serious buyer and that you have the financial capability to follow through with the purchase. This could increase the likelihood of the seller accepting your offer over others who may be willing to pay the full asking price, but lack the same level of preparation.
In the event that the seller declines your offer, it’s not the end of the road. You can either make a revised, more reasonable offer or choose to move on and find another property. If your offer is accepted, it’s time to return to your mortgage advisor and take the final steps towards securing your mortgage and completing the purchase of your dream home.
With the legal side of the home buying process taken care of, it’s time to focus on the mortgage aspect. One of the key steps in this process is submitting the required documentation to the mortgage lender. Given the large sum of money involved, the lender will need to ensure that they are lending to the right person and that they are able to repay the loan.
To verify your identity, financial status, and ability to repay the loan, you will need to provide a range of documentation, this includes:
If you are obtaining a joint mortgage, this documentation will be required from both parties.
With your mortgage offer being accepted, it’s time to move forward with the submission of your full mortgage application. Our dedicated mortgage advisor in York and their team of Mortgage Administrators have thoroughly reviewed and prepared all the necessary documents, so we are ready to submit your application to the lender.
Your advisor will send the collected evidential documentation to the lender, and then it’s just a matter of waiting for their decision. Although there is no set timeline for a response, our Mortgage Administration team will be monitoring the progress of your application and will follow up with the lender to ensure a prompt resolution. They will keep you informed of any updates and will be there to help if the lender decides to accept or decline your mortgage application.
Between the submission of your mortgage application and being offered a mortgage, the lender will require a property valuation survey to be conducted. This survey is usually performed by a trusted and accredited company nominated by the lender.
The purpose of the survey is to determine the true value of the property compared to the agreed purchase price. If the purchase price exceeds the actual market value, the lender may be less inclined to approve the mortgage, as in the case of default, they may not be able to recover the full borrowed amount. This scenario is commonly referred to as a “Down Valuation”.
There are various types of surveys available, each with different levels of detail and varying costs. Some surveys simply determine the property’s value, while others provide information about potential structural issues and necessary repairs for the future. Your mortgage advisor in York will assist you in selecting the appropriate survey for your needs.
The time has finally arrived – after your lender has reviewed your case and evaluated all the supporting documentation, they will present you with a mortgage offer.
At this point, our team of knowledgeable and friendly mortgage advisors and administrators in York, whom you have become familiar with throughout the process, will review the offer to ensure accuracy and completeness. Upon receipt of the mortgage offer, your Conveyancing Solicitor will then take over and guide the purchase to completion.
As a new homeowner in York, you have reached a significant milestone in your life. You have successfully navigated the complex process of purchasing a home for the first time, and we extend our heartfelt congratulations to you. With the stress and uncertainty of the buying journey now behind you, it’s time to settle into your new home and enjoy the rewards of your hard work and dedication.
The next step in your journey is to obtain the keys to your new home and begin the process of moving in. This is an exciting time, filled with anticipation and the possibility of creating new memories and experiences in your new surroundings.
We are proud to have been a part of your journey and to have provided you with the support and guidance you needed along the way. Our team of mortgage experts in York is committed to delivering a fast and friendly service that is tailored to your unique needs and circumstances. We understand that purchasing a home is a big commitment, and we strive to make the process as seamless and stress-free as possible.
If you have chosen a fixed-rate mortgage, rest assured that we will be in touch with you at the end of your term to assist you with your Remortgage needs. Our goal is to ensure that you continue to enjoy the benefits of homeownership for years to come, and we look forward to serving you once again in the future.
Mortgage Protection Insurance is a term used to encompass various different types of cover designed to protect borrowers from events that could severely impact their ability to maintain mortgage payments. There are different variations but when connected to a mortgage they are all there to provide peace of mind and usually fall in to the following categories:
Life cover generally falls into two types – “Whole of Life” or “Term Assurance.”
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” – but the type most commonly used as mortgage protection these days is “Decreasing Term Assurance.” This can be linked to a repayment mortgage and the sum assured reduces at roughly the same rate as the mortgage balance over the specified term.
Because the risk to the insurer diminishes over time, the premiums are generally cheaper than the 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 and ensure the borrower’s dependents aren’t left with a debt they might not otherwise be able to manage.
There’s an argument that says that life cover is taken for the benefit of other people – i.e. your dependants – because sadly you won’t be around to see any benefit yourself. However, these days, thanks to improvements in the sort of medical treatment available, many people now survive conditions which once might have been fatal. Nevertheless, whilst undergoing what may be lengthy spells of treatment and recovery, it could have a marked effect on your ability to meet your financial commitments.
This has led to the development of Critical Illness cover.
This works in a similar way to Life Assurance, in that it is usually taken for a specific term of years and can have different options such as level/increasing etc. It is designed to pay out a lump sum and, like Life cover, for borrowers, it is typically taken on a decreasing term basis in line with the reduction of your mortgage balance. The key is that the benefit is paid if you fall victim to one of a number of specified critical illnesses, and pays out whatever the long term prognosis of that illness.
The type of illnesses covered vary from company to company but, 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 condition suffered and the life companies all work to at least the pre-designated clinical definitions as prescribed by the Association of British Insurers. This means that they can’t just arbitrarily decide that you’re not ill enough.
Hopefully, if your treatment is successful, it means that not only have you survived, but you can benefit from your prudence 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 and would usually payout on the “first event” i.e. whatever happens first – either death or a serious illness – the pay-out is made. They can also be written on a single or joint life basis.
Whereas Life and Critical Illness cover pays out a lump sum, “Income Protection” pays out a monthly sum designed to replace your wages in the event of you being unfit to work.
Unlike Critical Illness cover, there are no restrictions on the illnesses or injuries covered, the only factor being whether they make you unfit to work. There are however restrictions in how much you can cover and how quickly benefits would start to be paid. This is largely 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 and benefits would begin to be paid after a “deferred period” which would normally equate to the length of time you would receive sick pay from your employer.
Benefits would continue to be 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 be 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 be 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 are written on a single life basis.
Similar in many ways to Income Protection these policies also cover you should you be made unemployed. Benefits are usually linked to your mortgage and other costs (rather than necessarily your wages) and would usually be paid one month “in arrears” after a successful claim.
These policies are only 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 a claim would actually be met. They are clearly a useful safety net if you are made long term unemployed but be sure to check the details of how/when any unemployment benefits would be 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 but can often be valuable – particularly for those with young families. These plans can be taken to cover Life and/or Critical Illness and are underwritten on application in the same way as mentioned above.
However, unlike the traditional forms of policy, rather than pay out a lump sum, the cover would pay an annual or monthly income for the remainder of the term of the plan. Thus it can replace the income of the main bread winner for a number of years, dependent upon a particular client’s circumstances and, 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 old adage that says you can never have too much insurance. Certainly many people have one or more of the different types of policy and it would be wrong to think of Mortgage Protection Insurance as just an “either/or” choice.
However, in the real world, affordability plays a massive part, so whilst it would be fantastic to cover yourself for every potential opportunity, a good advisor 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 type of policy however, your advisor would usually place all the cover with one provider. This is to save you the additional policy administration charges which individual policies carry but which are reduced when bringing all the policies under one plan.