Prospective first-time buyer Isaac Williams talks about having his first consultation with one of our mortgage advisers, James Watson, and reveals what he learned… (hint: it was good news).
After months of guesswork and questionable calculations, it turns out my partner and I can actually get a mortgage. Cue relief all round – not least for Chris, content manager at MB Associates, who thought I should write this blog about ‘getting a mortgage’. While nothing has been confirmed yet, a couple of weeks ago I had an excellent consultation with James Watson, one of MB Associates’ mortgage advisers, who seemed confident. Let’s take his word for it.
At the start of the Zoom call, James asked what I knew about mortgages. This was met by silence – I think some tumbleweed drifted across the screen. Undeterred by my complete ignorance, he quickly got to work explaining the basics of the property-buying process.
I gave him some information, including household income, and when and where we’d like to buy. He then gave me a breakdown of the main costs involved, some of the types of mortgages available (the fact there are different types was news to me), and what we can do now – before finding a place we like – to make the process a bit easier.
My main concern, prior to speaking to James, was around my self-employed status. Banks are creatures of comfort. They like the month-to-month predictability of payroll income. But self-employed people, with their devil-may-care approach to making money, make banks uneasy. ‘How are you going to pay a mortgage,’ they ask, ‘when our records show you haven’t received any income for four months?’ Fair question…
Luckily, my situation is slightly more stable from the bank’s perspective, because I have a freelance contract with a regular client and my monthly earnings don’t fluctuate too much. James also introduced me to the world of ‘contract lenders’, and since our call, he’s spoken to some men in suits who have said they would be happy to grant me a mortgage based on my contractual work. So far, so good.
Learning about mortgages
James explained some facts about mortgages that I hadn’t understood before and introduced me to a previously undiscovered world of terms like Loan To Value (the percentage you can borrow in relation to the property’s value) and Agreement in Principle (a statement from a lender about how much you could borrow), which are then abbreviated into acronyms like LTV and AIP. As you might expect, there was a bit of maths involved, but the general tone was positive, and the ultimate result would be monthly mortgage payments considerably less than the direct debit currently making its way to our landlord’s bank account.
In less good news, James also advised that as well as the 10 per cent deposit (minimum) we would need to secure a property, we should also expect to spend another £10-12,000 on surveys, solicitor’s costs and stamp duty. Buying a house costs quite a lot of money – who knew?
Bolstering credit scores
And while James was confident we could get a mortgage, to really get the banks on side he recommended bolstering our credit scores. He sent a link to a site where I could check my score, and I was pleased to find out it’s relatively good. Having never owned a credit card, however, there’s room for improvement. So, I’ve since finally taken the plunge and entered the big, bad world of credit (sorry, mum). James assured me that after a few months of paying off my balance in full, my credit score will improve.
Then all that’s left to do is make sure all utility bills and accounts are up to date (replacing any old addresses with our current one), and the small matter of actually finding somewhere we’d like to live. How hard can that be?