Getting a mortgage for the first time? We asked online mortgage broker, Trussle to provide guidance to the most commonly-asked questions.
Q1. Will I have a greater chance of being accepted for a mortgage when buying a new-build or older home?
“Mortgage lenders typically favour older homes, as new-builds can be harder to resell. And history has shown they grow in value more slowly. To balance out this risk, lenders tend to ask for larger upfront deposits on new-build homes.”
Q2. How can I be sure I’ll be recommended the best deal – aren’t brokers paid a commission?
“Brokers are paid a commission from the bank or building society when your mortgage application is approved. And the amount of this commission varies.
“However, brokers should not be influenced by this as, due to stringent rules set down by the regulator (FCA), they’ll be held accountable for why that particular lender and mortgage was recommended. They’ll also need to produce an audit trail.
“Brokers therefore select lenders and deals based only on eligibility, suitability and affordability. However, it’s important to bear in mind this might not always be the cheapest rate.
“It’s important to use a broker, like Trussle, that deals with the entire intermediary market. This means they compare mortgages from all lenders that work with brokers, giving you the widest possible choice.
“Some lenders though, such as First Direct, Lloyds and Yorkshire banks, are direct-only which means they don’t deal with brokers at all.
“But if the most suitable mortgage is from one of these banks – or it’s a one-off ‘direct-only’ deal from elsewhere – the same rules stand and that’s the mortgage we’d recommend. You can then bypass us and go direct to the lender to get it.
“Finally, unlike many other mortgage brokers Trussle is entirely fee-free to our customers. So, you can be sure you’re getting the best mortgage deal without spending unnecessary broker fees to get it.”
Looking to get a mortgage? Find out what you could borrow with Trussle’s affordability check
Q3. How many times my salary will I be able to borrow?
“These days, mortgage lenders tend to use affordability criteria to assess the amount you can borrow. This involves totting up all your monthly outgoings, and deducting the total from your monthly income.
“Lenders then use the remaining income to work out what size of mortgage you could afford to borrow – although the calculation will be ‘stress-tested’ and based on a higher rate than the one advertised on the mortgage deal.
“This means, if your outgoings are minimal – say £100 a month in credit card payments – you might be able to borrow between 4.5 and 4.75 times your single or household (joint) income. However, if you have lots of monthly financial commitments the multiple could be a lot lower than this.”
Q4: How many years can I stretch a mortgage over?
“Most lenders allow mortgage terms of 35 years with some – such as Nationwide, Halifax and TSB – stretching to 40 years.
“However, your age will be a factor. Lenders will want to see you have cleared the mortgage, typically by age 70 or in some cases (Santander for example), by 75.
“If you want to extend your loan beyond the maximum age limit, you’ll need to prove you’ll have sufficient income once you’ve stopped working – from a private pension for example – which will support both your mortgage repayments and living costs.”
Q5: What credit score will I need to be accepted for a mortgage?
“Most lenders access your credit report through the two main credit reference agencies, Experian and Equifax. With Experian the maximum score available is 999 – but Equifax doesn’t publish a score at all. Lenders will consider the contents of the credit report instead.
“But there is no set ‘score’ which will determine whether you get the green light on your mortgage application. Your credit report is one of several factors lenders will consider such as the size of your deposit, salary, any outstanding debt and how well you manage your bank account.
“It’s useful for first-timer buyers to know that, every time a lender accesses your credit report, it leaves a visible footprint. Too many of these – especially if you’ve been turned down – can have a negative impact on your score which can put off other lenders giving you credit in the future.
“But some lenders, such as Halifax and TSB, carry out what’s known as a ‘soft footprint’ which means the credit search is wiped from your report in 30 days, which can be really useful for first-timers who need to protect their credit reports.”
Bear in mind that your home may be repossessed if you don’t keep up repayments on your mortgage.
Want to know what you could borrow? Find out with Trussle’s affordability check