In the previous article, we looked at leasehold property and ground rent.  Here is the sixth article in this series, where we focus on what steps you can take to maximise your chances of getting the best deal you can.

1.  Deposits

How much your lender is willing to borrow depends largely on your personal circumstances. Gone are the days when a lender will simply agree to lend you a multiple of your salary. Today, the lender will expect you to have saved a minimum deposit of 5% of the purchase price. However, you are likely to find that the range of mortgage products available to you and the associated interest rate will improve if you are able to put down a larger deposit.

2. Government-backed schemes

Generally, it is not possible to borrow the deposit from a mortgage lender, but you may qualify for government-backed schemes which will increase the amount of deposit at your disposal.  This includes the Help to Buy Scheme and the Help to Buy ISA Schemes, so be sure to checkout what you are eligible for.

3.  Ability to repay

As well as checking that you can pay a deposit, the lender will evaluate your ability to repay the mortgage. In particular, they will consider your primary income as well as any supplementary income from the likes of bonuses, tax credits, and rental income for instance. They will also examine your monthly outgoings along with your credit history to see not only how much you spend but also what you spend your income on.

4. Difficulties obtaining a mortgage

Certain categories of purchaser may struggle to obtain a mortgage at all, or they may find that the range of mortgage products available to them is severely limited. Such circumstances may include:

• Purchasers over the age of 45 whose expected age of retirement is before the end of the mortgage term
• Self-employed or contractors
• Individuals with poor credit history, such as County Court Judgments (CCJs), bankruptcies, payday loans or previous loan/mortgage arrears
• Individuals whose base income is low and where commission or bonuses make up a large part of their income
• Individuals who are not registered to vote; have many credit applications; or have lived in the UK for less than three years
• Individuals who will be borrowing from a third-party to raise funds to purchase and where such property is in addition to mortgage borrowing.

If any of these circumstances apply to you, here are some tips to maximise your chances of obtaining a mortgage:

• Before applying for a mortgage, be sure to obtain a copy of your credit report from a reputable credit reference agency, such as Experian or Equifax.
• Check the report thoroughly for any mistakes and ensure these are corrected before submitting your mortgage application as the smallest error could affect your ability to obtain a mortgage, or the amount you can borrow.
• Check whether your credit report is linked to another person, (eg, spouse, friend or relative) through a joint account.  If they have a poor credit rating, this could count against you.
• Reduce any existing debt as far as possible before applying for a mortgage.
• If you are self-employed or a contractor use a specialist mortgage broker.
• Ensure you are registered to vote.
• Pay your bills on time.

5. Difficult to Mortgage Properties

Your mortgage lender will want to ensure that the property you are buying will offer them good security for their loan, so they will carry out a mortgage valuation on the property you are purchasing.

The valuer is not only assessing the value of the property for the lender, but they are also looking out for anything which might significantly affect the value of the property, including any defects.

It is important to remember that a mortgage valuation is not a property survey and it is undertaken for the benefit of the lender, and not you as the purchaser.  Therefore, you should always consider obtaining a separate, more detailed property survey.

Certain types of properties offer less security to mortgage lenders, and you may therefore struggle to obtain a mortgage for such properties (or the choice of mortgage product available to you may be severely restricted). The types of property may include:

• Flats in high rise buildings (generally higher than seven storeys) or flats above commercial premises (such as shops and takeaways)
• Properties which are of a non-standard construction such as prefabricated properties or those built from concrete, steel-framed properties, timber and timber-framed properties, properties of asbestos construction, properties with corrugated iron roofs and thatched properties
• Studio and freehold flats, and flats with a lease term of less than 80 years
• Listed buildings, especially where works have been carried out without the requisite Listed Building Consent
• New build properties
• Properties built on former industrial land/brownfield sites
• Properties situated in high flood risk areas or coastal properties
• Other ‘character’ homes such as converted lighthouses, windmills, schools and pubs
• Leasehold properties where the lease makes provision for the Ground Rent to be increased during the term of the lease to an excessive level.

Selecting the right solicitor to act on your behalf is a crucial decision in the house buying process, not least because they have the requisite knowledge to guide you through what can sometimes appear to be a complex and mystifying array of paperwork and terminology. There are numerous benefits of using a good, local solicitor to handle your case, including:

• Ability to use sound local knowledge
• Convenience to make an appointment for a face-to-face chat if you need to
• Speed to turn around the signing and return of documents

This article was written by Sarah Galvin, Associate Solicitor, at BPE Solicitors.  For further information, or an estimate of conveyancing costs, please contact Sarah or any of member of the Residential Property team on 01242 248499

In the next article in this series, we’ll give you a Guide to selling due to partnership breakdown