What do I need to get a mortgage?
Renting is great but owning your own home is the dream. Many buyers are unaware of their options or think that they need a big deposit to get a mortgage, so we created this quick read lifehack article for First Time Buyers.
Firstly, you do need to have an income. Employed or self-employed income is fine, as long as you can prove your income with payslips and bank statements if employed or tax returns/accounts if self-employed. If you have a low income, why not consider buying a property with a family member or friend?
Work out how much you could borrow by using this independent government Mortgage Calculator
Deposit (with some exceptions)
Typically, lenders will want to see a deposit of at least 5% of the purchase price. The higher the deposit you have, the better the interest rate for your mortgage. However, you can still buy a property without a deposit on one of the special government schemes if you qualify.
There are also lenders who will help First Time Buyers with no deposit if their parents, or a close family member or guardian can provide a guarantee. The Government Help to Buy scheme is also a very good option.
To get a mortgage you need a credit rating. You gain a credit rating by taking out credit accounts for various goods or services. These can be credit card accounts, mobile phone contracts or online credit with shopping websites. Make sure that these credit accounts are paid on time and don’t miss any payments.
We used the term ‘Credit Rating’ above carefully instead of ‘Credit Score’ because many First Time Buyers will stop reading if they have a bad credit rating. You can still get a mortgage with a bad credit rating or low credit score, but it is likely that you will need a bigger deposit if you have anything more serious on your credit report than just a few missed payments.
CheckMyFile.com offer a free trial and are one of the most comprehensive credit report providers that we have come across if you want to check your credit rating. They provide your credit report data from CallCredit (Noddle), Equifax and Experian all-in-one.
Photo ID & Proof of Address
You will need valid and in-date photo ID, typically in the form of a Passport or Driving License (Provisional Licenses are acceptable) along with proof of address dated within the last 3 months. Acceptable proof of address documents are typically personal bank statements, utility bills, council tax bills, insurance documents or HMRC tax notification documents.
No Deposit? You could still get a mortgage
Let’s face it, not everyone will have a load of cash locked away in a savings account. If you are working with no credit issues, you could qualify for a 100% shared ownership mortgage.
At the time of writing, there are some lenders who don’t require you to put up a deposit if you are buying a Shared Ownership property. Shared Ownership is a government supported scheme that has been set up to help First Time Buyers get on the property ladder.
Please see our article here: How Shared Ownership works
Author: Ben, Glow Mortgage Advisor (CeMAP, BSc Hons)
First Published: 20th November 2017