10 step guide to buying your home using our Contractor Mortgages
Busy Freelancers who are keen to take that all important first step towards buying a home or who are aiming to climb up to the next level of the property ladder will often feel it’s a daunting prospect so here’s our definitive guide to successfully making that move into the housing market.
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Find out how much you can borrow using a Contractor Mortgage
Your adviser will arrange an ‘agreement in principle’ from whichever mortgage lender you both agree is most suitable for your needs and this will mean that you can start looking for properties. You will almost certainly find it far easier to base affordability on your contract rate rather than accounts. Please note that you shouldn’t have to pay for the services of a mortgage broker although some now do charge a fee and we remain proud of our commitment to Contractors not to charge you for our advice. This can save you over £500 so it’s always best to check before you start to work with an adviser. An agreement in principle can be a great bargaining tool when you are negotiating on a property as it shows that a lender has agreed that they will provide a mortgage to you of a certain value and should massively improve your bargaining power because you can show any would be seller or estate agent that you mean business.
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Find your dream home
When you start house hunting, it can be both an exciting and a daunting time with so many options available but knowing how much you can borrow (using your agreement in principle as a guide) will allow you to narrow your search and make the right decision for your future. Online property search tools can be useful for finding a property but don’t make the mistake of also thinking their ‘best buy tables’ can be used to source your mortgage. These sites are inevitably aimed at the employed or self-employed whereas you fall between both categories and so need to a little bit of extra homework. If you really are struggling to find the time to properly research the market we offer a ‘Buying Agent’ service and can carry out the necessary legwork on your behalf. Once the preserve of the mega-wealthy, this service has now become a lot more widespread and is fast becoming the norm in the US. A Buying Agent works on your behalf whereas an Estate Agent works for the seller and so will source a property that fits with your needs for location, price etc and can help negotiate the price on your behalf.
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Make your offer
Once you find your dream home, you need to put in an offer. The key to negotiating is to know what you can afford to pay and how much you believe the house is worth. You can check what the house was previously bought for using websites that display the sold prices for houses by postcode or street name. This knowledge will give you the upper hand in any negotiation and will help to ensure you don’t pay over the odds for a house in your chosen area. Once you have made an offer you will then liaise with the estate agent who will act as a go-between for you and the seller. Stick to your guns and don’t be seduced into steadily increasing your offer so that it becomes unrealistic. Not only will you be likely to regret paying too much but it may also prove impossible to secure the mortgage you need if the lender judges that you are paying over the odds for a property. You will need to agree a final sales price for the property and once this has been set you can start the buying process.
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Contact your mortgage adviser to start the mortgage application and instruct a solicitor
Once you have agreed a purchase price for the property, you can kick start the mortgage application by calling us on 0845 062 8888. At this stage we will provide a dedicated mortgage assistant for you who will look after your application all the way to you getting the keys to your new home. In order to process your application you will need identification to hand such as your passport, driving licence and utility bills which will help protect against identity fraud and we can take all the details by phone to save you countless lengthy meetings. At this point all of the details needed to complete the application will ideally be with you as providing these in dribs and drabs can significantly slow down the process of securing your mortgage. Typically 3 months business and personal bank statements, your CV and contract or accounts will be required. At this stage you will need to instruct a solicitor and your mortgage adviser will be able to make a recommendation of a specialist conveyancing firm that ideally will use technology to reduce delays and cut costs for you. Alternatively you may prefer a local firm that could be conveniently located if you prefer the reassurance of a face to face meeting and we can also help you source this. Alternatively if you’d sooner gauge costs etc before starting your house hunt we can give you a quotation on 0845 062 8888.
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Searches and building surveys are carried out on the property
Having already agreed to lend to you during the application for an agreement in principle, the mortgage lender must now ascertain whether they want to lend on the property that you have chosen. A number of checks are carried out in order to assess whether or not the property is worth what you have offered to pay for it. These checks include area searches, building surveys and land surveys and are designed to find out if your property is a secure long term investment. It will highlight whether your property is built in an unsafe area such as contaminated land or whether there are structural problems such as subsidence which may damage the property. Some of these checks are carried out by your solicitor and some by the lender itself and your dedicated mortgage assistant will be on hand to help manage this process. In most cases these checks bring up minor points that you can often be ignore but more serious issues will enable you to negotiate with the buyer to get them fixed before you move in as a condition of the sale. Alternatively you can negotiate to reduce the purchase price to allow for these unforeseen costs. Sometimes the lender may insist that these problems are dealt with before they will agree to lend against the property.
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Mortgage offer will be produced
Once all of the searches and surveys have been completed and any potential problems dealt with, your lender should issue an ‘offer’ to your mortgage assistant. When this happens, we will contact you to confirm that your application is going ahead successfully and contact your solicitor to inform them that they can press on with finalising the purchase.
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Your Solicitor will contact you to ask you to sign the contracts
Whilst the searches are being performed on the property and the mortgage lender is investigating any queries, the next step is for both parties to sign the contracts. You or your mortgage broker will inevitably need to liaise with your solicitor to ensure this goes smoothly.
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Your Solicitor will request your deposit money and exchange contracts
Now comes the scary bit. Your Solicitor will contact you to request your deposit money which is normally around 10-20% of the purchase price. This is transferred to your solicitor so that they can hold it for you between exchange of contracts and completion. When you exchange contracts your deposit is handed to the buyers and acts as a binding agreement between you and the seller. Your solicitor will handle this for you so you don’t actually need to meet with anyone. Once your deposit is paid the seller must go through with the sale otherwise they have to give back your deposit and if you pull out of the purchase then the sellers are able to keep your deposit as compensation. If you are selling a house at the same time then it is likely that all or part of the deposit on your new home will only be releasable from the sale proceeds of your current property and so your solicitor will probably offer a facility to cover the deposit moneys between exchange and completion. However, amongst the excitement of exchanging contracts, it is easy to forget that the property is now yours to protect and look after and is now probably your most valuable asset. For that reason, it is essential that you take out a building and preferably contents insurance as well to protect your home and belongings against loss or damage and we will be happy to help tailor a policy to your needs on 0845 062 8888.
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You agree a completion date. The mortgage advance is requested and deeds transferred
The only thing that you will have to do at this stage is to agree a completion date with your solicitor, which they will then negotiate with the seller’s solicitor. Once you have agreed this completion date with the sellers, your mortgage assistant will then liaise with the mortgage lender to make sure that they are ready to release the funds before your completion date and you now need to concentrate on the packing. The final stage in the process of buying a home is conducted behind the scenes by your solicitor. The mortgage advance will be requested by your Solicitor so that the funds have cleared in time for completion. They will then send the transfer deeds to the sellers Solicitor and once these have been received the sale is complete.
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The purchase is completed and the estate agent will hand you the keys to your new home!
The only thing that you will have to do at this stage is to agree a completion date with your solicitor, which they will then negotiate with the seller’s solicitor. Now that the property is yours you can pop open the champagne for you and get the kettle on for the removal men. Congratulations, you are now the proud owners of a property! The process works slightly differently in Scotland and we will happily explain how on 0845 062 8888 or via mortgages@contractorfinancials.com.
