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Getting Prepared for a Mortgage in Bristol

First Time Buyer Mortgage Advice in Bristol

Once you’ve saved up for your money for a mortgage, the next step is preparation. You need to prepare for your mortgage application and get in a position where you are ready to start your process. If you are a First Time Buyer in Bristol, this guide will definitely help you progress with your mortgage application. Also, if you are Remortgaging or Moving Home in Bristol, you will still benefit from this article as it features some useful tips and tricks to help fast track your mortgage application.

Get Mortgage Ready in Bristol!

Up to date credit report

One of the first things that you should obtain during the preparation process is an up-to-date credit report. Having an up-to-date credit report is essential for your mortgage application; ideally, you should try and get yours arranged prior to approaching a Mortgage Broker in Bristol. Your report will be reviewed by your Mortgage Advisor in Bristol before passing it onto the correct lender.

Agreement in principle

Another thing that you should get ready is an agreement in principle. You need one to make an offer on a property!

If you want a fully credit-checked agreement in principle within 24 hours of your application, you should get in touch with us. As an experienced Mortgage Broker in Bristol, we can often turn around an agreement in principle on the same day of your application.

Proof of ID

In terms of proving who you are you’ll need to produce a photo ID. Most customers use a Driving license or passport for this element. You can’t use a Driving Licence for ID though if you are also using it for proof of address. If you are a non-UK national working over here on a Visa, you’ll need to produce that too.

When looking at proof of ID, the required documents will have to be photo identification such as a Driving Licence or Passport – though if you’re using one for proof of ID then it can’t be used as a proof of address. If you are a non-UK national working in England on a Visa then this will also need to be presented.

Proof of address

In addition to proof of identification, you will also be required to prove where you live. This is usually in the form of a utility bill or bank statement within the last 3 months.

Last 3 months’ bank statements

Your bank statements should reflect your income and regular expenditures. It will be displeasure to Lenders if they see gambling transactions on your account and they will also not be happy if you are seen to have surpassed an agreed overdraft limit or your direct debits have bounced regularly. The key factor is to get ahead of the game and get prepared as best as you can.

Not all lenders will ask to see your Bank Statements but it is an option that is available to them if they choose to utilize it – regardless of whether they do ask for your bank statements, they want to be confident that you take your finances seriously. The bank statements which you produce should consist if your salary going in and your bills going out.  

Evidence of deposit

A vital step in the mortgage application is evidencing your deposit for Anti-Money Laundering purposes. To help the process it is best not to move finances around your accounts too much as this will make it a lot more difficult and may delay the process.

Lenders like to see that you are saving your money responsibly, but that doesn’t exempt you from having to account for any large recent deposits into your accounts.

If you have been gifted a deposit, then there will need to be written confirmation stating it’s a non-refundable gift.

Proof of income

The most pivotal point of the application is proving your income. If you’re in employment then sufficient evidence would be your last 3 months’ payslips, though some lenders will also ask for your most recent P60. Lenders will take into account regular overtime, commission, shift allowance and bonuses. Additionally, extra earnings may also be considered with some lenders such as part-time jobs or self-employment.

Many applicants are Self Employed in Bristol nowadays – if you are a self-employed applicant then you may mean you will need to acquire your Accounts’ help to request your last two or three years’ proof of earnings from the Revenue. If you submit your own accounts then feel free to get in touch and we will be happy to advise you on how to go about downloading from the Government Gateway.

Budget planner

By working out an estimate of your expected outgoings after you move house means you can gain an idea of how much disposable income will be available to you to pay your mortgage after such things as regular expenditures, council tax, and utility bills have been paid out from your account. To help you with this, we are happy to send you our version of a Budget Planner to get you started.

As seen, there are many steps you must take in order to prepare fully for your mortgage application deeming it not an easy feat but it doesn’t mean you should worry. If you approach the mortgage application with due timing and an organized matter along with a Mortgage Broker in Bristol, you will be in safe hands.

Moving House Mortgage Advice in Bristol

The Importance of Changing Your Address

Mortgage Advice in Bristol

When it comes to applying for a mortgage, it is important to keep an eye on your credit score. The higher your credit score, the more likely that it is that you will be successful when applying for a mortgage with a lender. There are a variety of different elements that can have some kind of effect on your credit score.

One that is quite simple in theory but does has a larger impact than you might expect, is your address. Generally, the fewer addresses you have on your record, the better it will be. In the past though, we’ve seen people try to get around this in the wrong way.

A lot of the applicants we have dealt with are first-time buyers in Bristol who have moved out of their parents address into rented accommodation, but are keeping their bank statements, credit card and electoral roll information registered at their previous home.

For some bizarre reason, people think that it is beneficial to them and their credit score to keep everything under one roof. Whilst theoretically that would lean into the statement of “the fewer, the better”, this actually causes a lot more harm than good. Almost without fail, if you have moved to a new address; whether you change it or not, there will be a record of you living there somewhere.

Anything from a general eBay or Amazon order, to an ASDA delivery, to something like your car, contents or home insurance are all linked to your credit history and will appear with your address on in some way.

Check before you apply

Before you perform a credit search and apply for a mortgage, you have to be absolutely certain that as far as you’re aware, nothing will affect your credit score. You will need to make sure your current residential address is the one present on all accounts, be that electoral register, credit and debit cards, etc.

This only really applies to you if you have already moved out of your parents home, as up until that point you will be still only have your previous address to go off. Once you’re moved in, that’s when you should start moving everything over as soon as possible.

Regardless, when it comes to the point of applying for a mortgage, this all needs to be double and triple checked. We always find that people have a tendency to forget to update their address on their credit file and electoral roll. Please do your best to remember, it really does make a big difference!

Make sure that you definitely get the dates right too, knowing the exact date you moved into your rented property and the day that you moved out. Any mistakes made with these dates can sometimes give the lender the impression that you are occupying two properties at once.

Impress the lender

By keeping your credit file super up-to-date, you are giving the lender the proof they need that you really know what you are doing and you are completely serious about what it is you’re looking to do.

It’s a more open and honest way of handling the mortgage application process. Your goal should be to impress the mortgage lender in any way you possibly can and keeping up to date with your address is a good starting point for doing so.

If you are in need of any further help or are just looking for some handy tips from a professional mortgage advisor in Bristol, please do get in touch and take advantage of our free initial mortgage consultation.

We know that being a first time buyer in Bristol with no mortgage experience can difficult and stressful, which is why we’re here to help. Get in touch with a dedicated and trustworthy mortgage broker in Bristol today and we’ll see what we can do for you.

The Different Types of Mortgages Explained in Bristol

Mortgage Advice in Bristol for Different Situations

When you start out looking for a mortgage in Bristol you will soon realise that there are lots of different options available. Below you will see a list of the most popular types of mortgages available on the market and hopefully.  If you have any questions regarding any of the below mortgage options, then please do not hesitate to contact us.

What is a Fixed Rate Mortgage?

A fixed-rate mortgage means that your mortgage payments are going to stay the same for a set period of time. You can set the length of which you want to fix your payments for, typically this being 2, 3 or 5 years or longer. No matter what happens to inflation, interest rates or the economy you know that your mortgage payment, usually your biggest outgoing, will not change.

What is a Tracker Mortgage?

A tracker mortgage means that your interest rate will track the Bank of England’s base rate. So in other words, the lender that you are with does not actually set the rate themselves.  You will be paying a percentage above the Bank of England base rate. In an example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.

What is a Repayment Mortgage?

When you take out a repayment mortgage this means that each month you are paying capital and interest combined. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end and the property becomes yours.

This is the most risk-free way to pay your capital back to the lender, in the early years it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term. This situation switches in the last ten years or so of your mortgage, where your payments are paying off more capital than interest and the balance will come down much faster.

What is an Interest Only Mortgage?

Whilst many Buy to Let Mortgages in Bristol are set up on an interest-only basis, it is much more difficult to get a residential property on an interest-only basis.

It is much less likely for lenders to offer an interest-only product now.  However, there are certain circumstances where this can be an option. These include downsizing when you are older or have other investments that you will use to pay the capital back. Lenders are very strict when it comes to offering these products now and the loan to values is a lot lower than back in the day.

What is an Offset Mortgage?

With an offset mortgage, the lender will set you up a savings account to go alongside your mortgage account. How this works is that let’s say you have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you only pay interest on the difference, so in this case, £80,000. This can be a very efficient way of managing your money, especially if you are a higher rate taxpayer.

Agreement in Principle and Soft Credit Searches

Agreement in Principle Mortgage Advice in Bristol

What is an Agreement in Principle? | MoneymanTV

An agreement in principle, known as an AIP, DIP, mortgage in principle and decision in principle (depending on where you look), is a document that shows a seller that you are ready to proceed with a purchase and mortgage. It also allows you to make an offer on the property in question, proving to be useful when negotiating on the asking price.

Once you have passed the lenders initial credit checks, you will be able to obtain your own agreement in principle. Many first-time buyers in Bristol aren’t too sure of how they work, however, so below we’re going to explain how they work, how they affect your credit score and the length of time they last for.

How does your agreement in principle affect your credit score?

The effect an agreement in principle has on your credit score entirely depends on the type of credit search the lender decides to use. Generally you’ll find they will either perform a soft credit search or a hard credit search.

Understandably, especially for a first time buyer, you may not know the difference between the two. Allow us to explain;

Soft credit searches

For the most part, lenders these days will now carry out a soft credit search over a hard credit search. The reason for choosing this one is because they typically require less information and there is a lot less chance of your credit score being affected by a soft credit search.

Whilst whoever is undertaking the soft search will be gaining less information about you from it, than they otherwise would’ve gotten from a hard search, an agreement in principle from one of these lenders is usually still a very strong indication to the seller of the property you’re interested in, that your application is likely to be accepted.

Hard credit searches

Hard credit searches tend to be a lot more in-depth than soft searches are. The main difference between the two credit search types is that hard credit searches can have an effect on your credit score, by leaving what is known as a credit footprint. This means that previous credit searches will be visible to anyone else looking at your file in the future.

If you have a good credit score, this won’t really be a problem. Where it can be an issue, is if your score is lower and you have had multiple hard searches on your file. This is because, to a lender, it can look like you are trying to apply for lots of credit at the same time. It’s likely that this will put them off.

Does an AIP guarantee a mortgage in Bristol?

As much as we would like it to be so, nobody can ever be guaranteed a mortgage, but having an agreement in principle arranged in advance will definitely work in your favour.

Once you have given the lender with all your documents, an underwriter will review your case and proceed to make a final decision. Agreements in principle will often include small print that applicants can easily miss. It’s reasons like this why getting in touch with a mortgage broker in Bristol can be helpful to you.

We often find that in some cases when people get in touch, enquiring about an agreement in principle, they’ve been turned away at full mortgage application stage.

The documents that you’ll need to give the lender include, but are not limited to, forms of ID, payslips and bank statements. As a dedicated and experienced mortgage broker in Bristol, we take a lot of pride in helping you be prepared for your mortgage process. Once you start your mortgage process, it may be worth looking at how to get prepared for a mortgage in Bristol.

Making sure you have your agreement in principle in place when you’re ready to make an offer is a necessary step. Any estate agent with an ounce of credibility will ask for evidence that you are able to proceed with the purchase of a property.

How long will my agreement in principle last for?

Your agreement in principle will typically expire around 30-90 days. When this happens, your mortgage advisor can renew it for you. We are usually able to obtain one an agreement in principle within 24 hours of your initial mortgage appointment.

As an experienced mortgage broker in Bristol, we would suggest that you obtain one of these as early as you can. We say this so that you can try to avoid being told you aren’t eligible for a mortgage on your dream home.

The good thing about having your agreement in principle and it lasting a good length of time, is that you don’t just need to apply for the first home you see. You have time to look around and find one that suits you best.

If you are a first time buyer in Bristol or are looking at moving home in Bristol, please get in touch and take advantage of our mortgage advice service. We offer a free initial mortgage consultation, where you will get to speak with one of our expert mortgage advisors.

Why Use Our Mortgage Advice Service in Bristol

We Specialists in Different Types of Mortgages

As a dedicated mortgage broker in Bristol, our job is to support you through your mortgage process from beginning to end, making it a stress-free and easy-going experience. We aim to find you the most suitable mortgage product tailored to your specific financial and personal circumstances.

We feel the customer should know exactly how our service works and what different order parts of the process come in. So, to give you an insight into our process and how it works, we have put together a handy guide that we think you will find helpful.

How does our process work?

Step 1 – Get in touch

First of all, once you have contact and speak to one of our responsive teams, they will take some details from you. This is to help build a profile to get a picture of who you are and what you’re looking to do. All this information will help us, partner, you up with a suitable mortgage advisor in Bristol.

Following the chat, we will get you booked in for your free mortgage consultation with your dedicated mortgage advisor in Bristol.

Step 2 – Free mortgage consultation

During your free consultation with your dedicated advisor, they will ask you a few more questions. This will give them a closer look into your mortgage needs. From here on out, this advisor will help you find the ideal mortgage deal for you!

If they manage to find you a great deal that benefits both your personal and financial situation and you’re happy to take it up, we are ready to continue to step 3.

Step 3 – Agreement in principle

This step continues right after your consultation. Your advisor will arrange a mortgage agreement in principle (AIP) for you within 24-hours of your consultation.

Having an agreement in principle in place early on in the process is crucial. It shows a seller that a lender is willing to let you borrow from them. Of course, this can provide evidential documents to back up your income and credit score.

During this part of the process, if you haven’t already found a home to make an offer on. You can start hunting for houses with your agreement in principle to back up any offers.

After your agreement in principle is in place, we’ll begin collecting evidential documents from you to back up your mortgage application. This will include things like payslips, bank statements, photographic ID. These documents and the amount that you need to supply do vary if you are a self-employed applicant.

Step 4 – submission 

As soon as everything looks good on our end, we can move to the mortgage application submission stage!

We will only submit your mortgage application if we know that you’ll pass your lender’s credit scoring criteria; we don’t want it to be declined. Once your application is with your potential lender, it’s just a waiting game now. During this time, we’ll be regularly informing you on the progress of your mortgage application.

As soon as we get the green light, we will be in touch straight away to give you the confirmation that you’ve had your mortgage application accepted. Congratulations, you’re now on the road to moving into your new home!

Specialist situations

At Bristolmoneyman, we want you to have the most straightforward mortgage process possible and come out with a great mortgage deal. However, we also deal with complex cases, so if you are struggling to get a mortgage through the traditional mortgage route, our service is in place to offer help when needed. 

Our mortgage advisors in Bristol have been helping customers overcome complex cases for over 20 years now. We have had customers in the past who been turned away from their bank, and we’ve still been able to get them a mortgage offer. We love a good challenge, and our team would love to help anyone struggling with a complicated mortgage situation.

Speak to a Mortgage Advisor in Bristol

Now that you’ve learnt more about our service, it’s your job to get in touch. We are available 7 days a week. Therefore, you can choose when to contact us.

Customer service means everything to us, and we want to ensure that you’re delighted with every part of our service. But, of course, it would help if you took advantage of our free consultation. So whether you’re a first time buyer or moving home in Bristol, we recommend getting in touch now.

Why Use a Mortgage Broker in Bristol?

Aiming to Take Your Stress Away

One of the primary factors in why Home movers and First Time Buyers in Bristol use a Mortgage Broker in Bristol, is to help the process of buying a home go as quickly and as smoothly as it can go. For many, the home buying process can be a very stressful experience and for our customers, it’s a comforting relief to know they have got someone on their side to deal with the hard parts, with availability to answer any questions they may have.

Your dedicated Mortgage Advisor will work incredibly hard to try and ensure that you obtain the cheapest or at least most favourable mortgage outcome for your personal needs. This level of dedication and passion for our work applies no matter the mortgage type. Whether you’re making your first purchase, a second purchase or you wish to Remortgage, we put everything we have into our service, to ensure our customers have the best outcome available to them.

When Should I Get Mortgage Advice in Bristol?

If you’re looking at taking out mortgage advice when buying a home, we would personally recommend talking to a Mortgage Advisor in Bristol as early on in the process as you can. Your trusted member of the Moneyman team will be able to help you work out roughly how much you’ll be able to pay per month, as well as how much you may be able to borrow.

Different lenders each have different criteria, so speaking to an expert in the field, with a wealth of knowledge surrounding these criteria, will be of a great benefit to you. If you know what you are able afford well in advance of making an application, it may help you avoid any potential future disappointment. 

Communication and responsiveness are also a large part of what we do. We aim to ensure all of our customers are kept informed about the progress of their mortgage application by email, so you are fully aware of what is going on and where the process is headed next. If something ever goes wrong or you have any questions, we are always available at the end of the telephone, ready to help you out in any way we can.

Free From Estate Agents, Banks or Building Societies

A trusted and loyal Mortgage Broker will work for the customer and not the Lender. This is something that is important to remember throughout your process. Our team are firmly in your corner, sometimes having to argue how strong an application may be, in order to ensure it goes through. Thanks to our initial checks, we find that we know our customers financial situation inside out. Through our company process of requesting and checking your proof of income and bank statements ahead of time, we look to carefully avoid any hurdles that may arise, hopefully before they can become a factor. 

We also have the ability to help you choose the right type of survey for your property transaction, as well as instruct a Solicitor on your behalf to carry out the legal aspects of your final transaction. We are experts in the art of completing application forms on behalf of our brilliant customers, again working hard to ensure complete accuracy and giving your application the best chance of completing in the end.  

Building Customer Relationships

Finally, our motivated and caring Mortgage Advisors love to build up customer relationships, with an aim to assist with future mortgage enquiries, be this as a Buy-to-Let landlord with your own portfolio, or to Remortgage when your term ends. Your journey starts with an affordability assessment and Agreement in Principle, before you even get to the part where you find a house.

Once your purchase is complete, your advisor will still keep in regular contact via email and in the six months running up to the initial mortgage product coming to its end, will get in touch once more to discuss your Remortgage options. At this point we are then able to compare the market on your behalf like we did before, with the goal of helping you obtain the best remortgage deal available for your circumstances.  

Self-Employed Mortgages in Bristol

Mortgage Advice in Bristol for Self-Employed Applicants

Self-Employment is always on the rise, which brings a surge in Self-Employed Mortgage Applicants in Bristol. There are now more opportunities than ever to work from work, start a business, and more. As an expert Mortgage Broker in Bristol, we rarely see people planning to stay with their first employer from their first year through to retirement. They want to change their jobs to improve their personal development and financial situation.

Self-Employed Mortgage Advice | MoneymanTV

There are lots of opportunities for the self-employed and freelancers within the many sectors available. We can thank the world for becoming more interconnected. We are constantly learning, which opens more and more opportunities for the self-employed within these industries.

It used to be difficult for Self-Employed applicants to obtain a mortgage. Additionally, with Self-Employment now becoming a lot more common and a lot more opportunity opening up in the market, lenders have become more relaxed and lenient with self-employed applicants. The process of applying for a mortgage as a Self-Employed applicant is now a lot easier than in previous years.

Self-Employed Mortgage Hints and Tips in Bristol

To get you prepared for your mortgage, we have compiled a small collection of helpful mortgage guides to support anyone from Self-Employed mortgage applicants to those considering Moving Home in Bristol. In any case, if you are a First-Time Buyer in Bristol, we are sure that you will find the assistance of a dedicated mortgage Advisor in Bristol beneficial.

How many years’ books do I need?

The minimum you will need to obtain a mortgage is one year’s accounts. If you go with a specialist self-employed lender, you will find that they often work off a single year, whereas high street lenders tend to be a little stricter and will want two year’s accounts from you.

Unfortunately, statistics show that most new attempts at running a business end up being unsuccessful, and this is why lenders always need you to evidence your track record to prove you are reliable and stay open for business.

How will a lender assess my income?

Most lenders will look at the average of your last two years’ worth of income. Although your business has grown over the past year, and the lenders can see that you will be able to afford a mortgage and run your company, they will go off the latest year and ignore anything that has happened previously.

I’m a director of my own limited company

If you are a director of your own limited company, you are technically an employee of your own business. However, lenders will not view it this way and will only assess you as an employee if you own less than 25% of company shares.

Lenders often add the dividend you have drawn to your annual salary as a way to work out your earnings for the year. The amount you can borrow for your mortgage will get based on many of these particular figure.

You will find that some lenders will work from your net profit from time to time rather than your salary/dividend. It works in favour of company directors who like keeping their drawings low.

My accounts don’t reflect the true success of my business – what are my options?

As a committed Mortgage Broker in Bristol, this is a question that we find ourselves getting asked frequently. During the meeting you have with your accountant each year, you will discuss how to minimise your tax liability. It works the other way when it comes to taking out a mortgage as a Self-Employed Mortgage applicant, where the more income you have declared, the bigger the mortgage you may find yourself able to obtain.

How much deposit do I need to put down?

Whether it’s a Self-Employed Mortgage or not, a minimum of a 5% deposit is still required. It’s the same as employees. If you only have one year’s accounts, you might find it more beneficial to put down a bit more deposit than what you initially would’ve to increase your chances of succeeding. See our article to find out more on how much you need for a deposit in Bristol.

Contractor mortgages

When it comes to looking at mortgage options for contractors, there are lots available. Nowadays, it’s a more common occurrence to find people working from short-term contracts. If you can evidence that your company has a good track record, your lender can consider taking your ‘daily rate’ rather than going by your net profit. It will be beneficial to contractors significantly, as lenders will consider treating you as if it’s more likely to work in your favour doing so. They’ll treat your case as self-employed instead.

Lenders will need you to provide information on how long your current contract is left, as this can influence their decision. They need to be confident that your income will continue as it is to get an accurate indication of whether or not you will be able to afford your mortgage. Even when you’re on your very first contract, it may still be possible to obtain a mortgage, though this all depends on your specific circumstances.

Can I still get a self-cert mortgage?

It is no longer possible to get a self-cert mortgage. These got heavily abused and caused significant problems for both the mortgage market and the economy. There are zero plans for these to make a return in the future.

Want to get in touch? We’d love to hear from you

We know that trying to get a mortgage as a sole trader, partner, or company director can be a tricky process, primarily down to evidence of your income. Whilst it can be much easier for an employed applicant, know that you have the same chance of getting a mortgage as anyone else with a similar income and credit score. Depending on the lender you take out a mortgage with, some may have stricter criteria than the standard lender. Just another reason why approaching a trustworthy Mortgage Broker in Bristol could be genuinely beneficial to you and your goals.

We may be able to give you a realistic expectation from the start, guiding you through the self-employed mortgage process and providing support even beyond. Our reliable and determined mortgage advisors in Bristol can search through thousands of mortgage deals on your behalf. Every customer has access to a free initial Mortgage Consultation, so make sure that you get in touch with one of our Mortgage Advisors in Bristol today. We will talk you through the most appropriate route for you to take based on your self-employment history.

What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Bristol

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Bristol will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in Bristol & those who are Moving Home in Bristol. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

How Much Deposit Do I Need To Buy A House in Bristol?

Mortgage Advice in Bristol

The amount of deposit you need to buy a property entirely depends on your personal circumstances and what it is exactly what you are looking to achieve. Here we explore how much you may be required to save for, depending on those factors.

Why do I need a deposit anyway?

In previous years, 100% mortgages were readily available and some lenders were offering 125% loan to value mortgages. What this means is that if you were buying a property valued at £100,000 they would lend you up to £125,000. It’s no surprise with that method, that things went very wrong.

Lenders require you to put down a deposit simply to lower their lending risk. If they lend you 100% of the purchase price and you somehow fall into arrears, leaving them to take possession of the property, then it only takes a minor reduction in house prices for them to suffer a loss. Of course, this is something they would like to avoid.

There is also the thought some have that says if you haven’t invested some of yours or your family’s money into your home, then you might find it a bit too easy to “walk away” should the going get tough and you were finding it difficult to keep up your monthly repayments.

Also, if you are not yet able to save up say, 5% of the property purchase price yourself then it could be debated that you’re not yet prepared to get onto the property ladder.

Won’t the government pay the deposit for me?

No, but if you can find 5% of your own resources then you might find yourself qualifying for the government’s Help to Buy equity loan scheme. This only applies to new build properties. You put in 5% and the Government loans you up to 20% to make up the rest as a 25% deposit.

After 5 years you will need to see about paying the equity loan back possibly by way of a remortgage or from savings you have been able to save up during your mortgage term.

Is a 5% deposit enough?

Currently, yes 5% is enough in the majority of situations. Not all Lenders will accept only a 5% deposit though, so your options may be a little more limited. Normally you will need a reasonable credit score to qualify for a mortgage.

You may still find lenders out there that would consider you for a 95% mortgage with an average credit score but the rate of interest would be higher.

My credit history is poor – how much do I need to put down?

Most specialist lenders would prefer to put down at least 15% deposit if you have a considerably poor credit history. As mentioned in an aforementioned point, this is purely to reduce their risk in case a repossession occurs. It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it is still possible.

What about Buy to Let?

It’s always been necessary to put down a larger deposit for Buy to Lets and most lenders at the moment are looking for 25%.

Can I take out a loan for the deposit?

This may be possible in very few cases, but the vast majority of lenders won’t let you do this, as this would practically still be 100% lending and this isn’t something seen anymore.

Can someone gift me a deposit?

This is something that happens all the time! Usually, it’s “bank of Mum and Dad” (birth parents, adopted parents and legal guardians) gifting or other family members.

In some cases though, family friends can gift you money, so long as they can evidence the funds, prove who they are and confirm they are not expecting it to be paid back as a loan.

Are there any circumstances where I don’t need a deposit?

If you are purchasing as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the Right to Buy scheme then you usually wouldn’t need to put any of your own money in as the equity is already “built-in” to the deal.

Please remember that the above information is for reference purposes only and is not to be seen as personal financial or mortgage advice.

Need a Mortgage Agreement in Principle in Bristol?

Agreement in Principle Explained | MoneymanTV

An (AIP) Agreement in Principle or as some people call it a Decision in Principle, is where you pass a lenders credit score to qualify for a potential mortgage.

It’s handy for the first-time buyer in Bristol to have an Agreement in Principle ready, and this will help support any offer they made.

In some cases, you may be able to negotiate a lower price if you obtain one of these as it gives the seller confidence that you are serious about having the funds to proceed.  

Will obtaining an Agreement in Principle Affect my Credit Score?

We see more Lender choose to go with a soft credit search. However, some may still affect your credit score. Additionally, this can be the case if you decide to go with a hard inquiry, but from our experience, a soft search should leave your credit score unaffected.

Soft searches don’t dig as deeply as hard searches, though you can trust that the Lender made the correct choice either way.

Soft Credit Search Explained | MoneymanTV

Should I avoid hard credit checks?

As long as you don’t do it regularly, then the odd hard search should not male too much of a difference. It only becomes a problem if you start having multiple hard searches within a small space of time.

In any case, if your credit rating is right and you know it, do not let this put you off, especially if taking a hard search with that Lender is the best deal.

Is an Agreement in Principle a guarantee that I will get the Mortgage?

Sadly there are no guarantees that having an Agreement in Principle will get you a mortgage. The Lender will still need to see all your documents, and only then will an Underwriter make the final decision.

Often customers have gotten in touch getting because they get declined at the application stage, due to missing some small print in their Agreement in Principle.

You will need to provide ID to prove that you are genuine, payslips to prove you earn the amount you claimed, and bank statements to prove you conduct your finances before a lender offers your case.

Can I make an offer without an Agreement in Principle?

It is possible to make an offer without an Agreement in Principle. However, we strongly would not recommend it. An Estate Agent with credibility will want you to prove you can proceed.

How Long Does it take to get an Agreement in Principle?

It is possible to obtain an Agreement in Principle within 24 hours of speaking with a Mortgage Advisor in Bristol.

How Long Does an Agreement in Principle Last?

Usually, an Agreement in Principle will expire after 30-90 days. You do not need to worry, though as this does not mean you should apply for the first house you find.

If your Agreement in Principle expires, you can quite easily have it refreshed when you are ready to make an offer.

Finding a mortgage only to be declined a mortgage can understandably be disappointing. As such, we recommend getting an Agreement in Principle as early as possible.

Bristolmoneyman.com & Bristolmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

© 2021 Bristolmoneyman

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