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9 Questions to Ask When Buying A House in Cardiff

First Time Buyer Mortgage Advice in Cardiff

When you’re inexperienced as a first time buyer in Cardiff and have never taken that initial step onto the property ladder, the process can sometimes be a stressful one. Luckily for you, it doesn’t have to be like that. To help put you in the best position for your next house viewing and to get ‘mortgage ready’, we’ve put together a list of nine questions that you should always ask when buying a house as a first-time buyer in Cardiff.

The 9 most common questions:

1. How much interest has there been in the property/development?

Taking out a mortgage will more than likely be the biggest financial commitment you ever make in your life. As such, you may find yourself wishing to take some time to think about your options and what you really want to do.

In enquiring with the vendor or estate agent about the amount of viewings that have taken place at the house, you’ll be able to more accurately predict how much time you have to properly think this through, before you make a definitive decision. Of course, if the property is receiving lots of interest, you need to be ready to make a final decision as soon as possible, so to avoid losing out to another buyer.

2. Is there a property chain?

A property being tied up into a property chain can have a huge influence on how your mortgage process will go down the line.

If there’s no onward chain (e.g. new home, bereavement or emigration), you’ll more than likely be able to move fairly quickly, especially if you’re not part of a chain either. If there is no requirement for you to sell your own property in advance, then you’ll have more leverage as a buyer, as you won’t be holding up the home buying process for anyone else.

Be sure to use this to your advantage when entering into property price negotiations.

3. What’s included in the sale?

If you’re not buying a new build property, then the previous homeowner may have left some items behind when they moved out. We often hear about white goods (which can include things like washing machines, fridges, freezers etc.) or even garden sheds being left behind for the next person who moves in.

For home buyers this can be fantastic, as it can not only save you money on buying those same items, but it can also save your time, as you won’t need to spend time finding these items and awaiting delivery.

On the flip side of this, if you don’t want or need these items, you will have to factor in the costs and time of disposing them. If you are buying a new build property, you might find that there are optional extras you can buy which will be ready for you on the day you move into your new home.

4. What are the neighbours like?

When moving into an area that you don’t have any familiarity with, it’s worth doing some research to see what the neighbours are like, as a good or bad neighbour experience can often be the deal breaker in what your experience of living in the property is like.

That being said, if you’ve had the opportunity to move into a new housing site that has been or is being developed, you will be creating an entirely new neighbourhood with people who are more than likely unknown to you. This itself can be a risk, as you cannot prepare for what the locals will be like ahead of time.

5. How much does it cost to run?

The running costs of a property can significantly differ, depending on the house and the location, so it is very important to do your research on these and ask the right questions.

Make sure you find out how much the Council Tax is, along with how much on average you might be spending on utilities, by asking the seller or doing some of your own research online. Obtaining this information can help you budget for each property you have viewed accordingly.

6. Which way does the house face?

This may seem like a bizarre one, but it can be an incredibly important factor to many people. If you are fond of relaxing in the garden on late summer evenings or reading books with a good source of natural light, you need to find out which way the property is facing.

What’s unfortunate here is that through looking for this, you’ll often pay a sizable, more premium price for a south-facing garden, due to the fact that they receive the most sun during the daytime.

7. How much work will be required after moving in?

This is again something that can have quite the impact on your budget. You should always look to see if there is any work required in the property for improving energy efficiency, changing any decorations and addressing any problems with damp that exists in the property.

8. Are you open to offers?

Getting started on negotiation discussions for a property you’d like to buy is a pretty common home buying step. As such, it’s important to make sure you are as prepared as you possibly can be to make an offer on a property that you are interested in. Once you are ready for this, the next step is for you to go and start making offers on a property.

It is also worth initiating a conversation with the seller or estate agent to figure out roughy what the seller of the home you are after may consider to be a lowball amount, as well as find out the maximum amount it is worth. You should also look to find out if any other offers have been made and rejected prior to you making your offer.

9. When can we move in?

By picking a date in your diary that you ideally would like to move at, you are able to plan your other jobs around that date. This will be tasks such as instructing a conveyancing solicitor, packing up what you own ready to move and arranging a removal van to bring your belongings to your new home.

Moving Home Mortgage Advice in Cardiff

Can I Have Two Mortgages in Cardiff?

Second Charge Mortgage Advice in Cardiff

Depending on the situation you happen to be in, a second mortgage may be a possible option for you to look at utilising. There are two different methods this can be achieved.

You may be able to obtain a Second Mortgage for buying an additional home or taking out a Buy to Let, allowing this to run alongside your existing mortgage. Alternatively, you may have the option of a Second Charge, where you take out an additional mortgage amount against the same property, with a different mortgage lender.

Below we’ve put together a guide on where this could be applicable, as well as a helpful video guide where Malcolm talks about the significance of taking out a second mortgage in Cardiff.

Can I Have a Second Mortgage? | MoneymanTV

Why would you take out a second mortgage in Cardiff?

There are various different situations where someone might find themselves needing to have more than one mortgage. Through our experience as mortgage advisors in Cardiff we’ve heard of some fairly common recurrences, with these including, but not limited to;

1) Wanting a second mortgage to raise money for your existing home.
2) Looking to rent out your existing home and purchase a new one.
3) In the market to buy a new property with your name on another mortgage already.
4) Looking to help your children out with a second mortgage.
5) In need of a second mortgage to purchase a buy to let property.

Looking at the latter one, we feel it’s important to let you know that we have a vast wealth of knowledge on Buy to Let mortgages in Cardiff, having worked with many lenders including very specialist ones, all with their own unique lending criteria.

We also have a long history of helping Buy to Let Landlords with their properties. For more information on being a Landlord, please check out our Buy to Let Mortgage Advice in Cardiff page.

Second Mortgage to Raise Money

If you have equity in your home, you could have the option to take out a Second Charge to release this equity and fund the deposit for a potential additional purchase. It can also be just generally used for any purchase, such as a new car, a holiday or something else.

The way a Second Charge works is that if you still have equity sitting in your property, you may be able to take out a mortgage with a second lender, in order to release some of the equity in the property.

Usually, if you are on a lenders Standard Variable Rate, we are able to shop around for you and find a more competitive deal whilst also releasing Capital. A further advance with your existing lender may also be an option available to you.

Second Mortgage to Rent out Existing Home to Purchase a New One

In some cases, homeowners may be looking to keep hold of their existing property, with the intention of renting it out a taking out a second residential mortgage on a new property. This process is known as a Let-to-Buy Mortgage and has become increasingly popular over the last decade.

Second Mortgage to Purchase a Home For Your Children

Sometimes your Children or even Grandchildren may be struggling to find their footing on the property ladder. As such we regularly see homeowners using either a Second Charge to release some equity to gift their loved one either a portion of, or the full amount of deposit.

Second mortgage for a Buy to Let in Cardiff

We find that there are many landlords looking to purchase additional Buy to Let properties to add to their portfolio, by taking out a second mortgage. Our team are able to use our expert knowledge to recommend the most suitable Buy to Let mortgage product based on your personal circumstances. You will be asked to produce a higher deposit for this mortgage than a typical residential mortgage.

Named On an Existing Mortgage and Want to Buy a New Home

If you are currently named on another mortgage and unable to get your name taken off of it, you may still want to try your luck and apply for a mortgage of your own. This is a situation we come across often and have experience helping many different customers with.

Specialist Mortgage Advisor in Cardiff

No matter your situation, if you are looking to get a second mortgage, we may be able to help. As a fast & friendly mortgage broker in Cardiff, our Advisors are able to search thousands of mortgage deals on your behalf, following up with a recommendation on the most suitable product for you based on your personal situation.

For more information get in touch to book your free initial mortgage consultation, and speak with a dedicated mortgage advisor in Cardiff.

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 Cardiff

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 Cardiff 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 Cardiff & those who are Moving Home in Cardiff. 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. 

Self-Employed Mortgage Criteria Advice in Cardiff

Self-Employed Mortgage Advice in Cardiff

Being self-employed can often be perceived as a hurdle to getting a mortgage, but with an experienced Mortgage Broker in Cardiff working with you, you may possibly be able to overcome these hurdles.

The first thing that you need to be aware of is that there are no specific lending criteria for sole traders and Limited Company Directors that everyone follows. Each lender has their own individual policy and the amount they will allow you to borrow can be incredibly varied.

Sole Traders or Partners

Let’s have a look at sole traders (or partners) first. The amount you are able to borrow for a mortgage will be based on your net profit which can be confirmed by obtaining your Accountant or direct from the Inland Revenue.

Most lenders average your last 2 or 3 years’ net profit but there are lenders that may still consider using your latest year. If your net profit has decreased the lender will usually base everything off the latest year and require an explanation as to why it has dropped.

Limited Company Director (20% or more shareholder)

If you are a Limited Company Director who owns 20% or more of the shares in the business then the lenders will deem you as self-employed and regarding averaging, the same rules will apply. The figure that they tend to average will be your salary (generally this can be equivalent to the tax-free allowance) + declared dividends,.

At some points in time, a Limited Company may be performing well in terms of net profit but the Directors are not drawing their dividend – these type of applications can be disadvantaged in terms of maximum borrowing capacity because they aren’t able to declare as much income. This is not the end of the road, however, because there are lenders out there that will consider using your share of the net profit, as opposed to salary + dividends.

Minimum Trading Period

The minimum trading period for Self-Employed or Limited Company Directors is one year, although you may find that there are lenders out there who want longer than that. If you have recently formed a Limited Company after a period as a sole trader under the advice of your Accountant, then there are various available lenders who can look at this, providing it is in the same line of work.

As you can see from the above, Self-Employed Mortgages in Cardiff are often quite complex, so if you would like to talk about your situation please feel free to Get in Touch and we’ll talk you through your process. We can also send you a form for your Accountant to complete, which will help us tailor-make a recommendation designed to meet your personal situation.

Help-to-Buy Mortgage Schemes

Help-to-Buy Mortgage Advice in Cardiff

After the perilous financial crash in 2008, known as The Credit Crunch, the government brought in some backup to try and provide a much needed boost the mortgage market. They brought in new ways to help First-Time Buyers get onto the property ladder, with these being called Help-to-Buy schemes.

There are a number of different Help-to-Buy schemes available in the market. Some you may be able to match with and some others maybe not so much. Here is a list of the Help-to-Buy schemes and some other similar schemes that you may have access to.

Help-to-Buy Equity Loan

The Help-to-Buy Equity Loan is the most popular of the various schemes. If you are a First Time Buyer in Cardiff and want to get your mortgage process rolling, this could be the ideal way for you to do so.

Help to Buy Equity Loan Mortgage Advice UK | MoneymanTV

Firstly, you have to be First Time Buyer to be able to access this scheme, as well as only being able to purchase a new-build property too. A minimum of a 5% deposit is also a necessary requirement.

The way this scheme works is that you put down a deposit of 5% or more and then the government loan you rest to make up a total of a 25% deposit. Two examples of this would be if you have a 5% deposit they will loan you 20% or if you have a 10% deposit, they will loan you 15%.

This will leave you with a 75% mortgage and the government equity loan which you will have to pay off. You will get a period of 5 years to pay off this equity loan interest-free. If you are unable to meet the 5-year cut off point, you will start building up interest on the amount of the loan that is remaining. This interest rate starting point is 1.75%.

As a dedicated Mortgage Broker in Cardiff, we know that it can be quite difficult to balance your mortgage payments and the equity loan repayment alongside each other. There are ways around this, such as being able to remortgage to raise capital for this loan. This one, however, will increase your mortgage payments.

Help to Buy Equity Loan - Cardiff

Help-to-Buy Shared Ownership Scheme

The Help-to-Buy Shared Ownership scheme was introduced as a means to help applicants to purchase a percentage of a property and then pay the rest back on rent over time.

The percentage of the property that you own in your name usually has to be between 25-75%. The remaining percentage will most likely be owned by the housing association. This share can possibly be increased at a later date, maybe at a point when you have more money.

The way that your payments work is that you have to pay your mortgage as well as your rent. So what this means is that you are basically paying 100% of the ground rent and service charge on the property. This is still the case, even if your share is the lowest available amount.

Shared Ownership Banner - Cardiff

Help-to-Buy Armed Forces Scheme

The Armed Forces Help-to-Buy scheme was introduced in 2014 following the previous success of the Help-to-Buy Equity Loan scheme. This scheme had the same concept of the prior version, however, this one was specifically for members of the armed forces.

Help to Buy Armed Forces Mortgage Advice | MoneymanTV

If you match the criteria of the scheme, it could be a great option for you to take. The government has now extended the deadline/review date of the scheme to later in time at December 2022. Here at Cardiffmoneyman, we are hoping that it stays around, as the scheme is incredibly helpful for existing armed forces members who really need that extra help with getting onto the property ladder.

Help to Buy Armed Forces - Cardiff

Bonus: Lifetime ISA

The Lifetime ISA is often a scheme that is forgotten by homebuyers. It’s not a go-to scheme, however, it’s still very useful to be aware of it, it can help you secure a new home as a First Time Buyer in Cardiff.

A Lifetime ISA is basically a savings account where your money grows, free of tax. The government will also give you a nice little top up of your savings by an extra 25%, so if you meet the £4,000 maximum amount, you will receive a pretty handy bonus of £1,000.

You have to pass certain criteria in order to gain access to this type of mortgage scheme. All of these details are available on the Lifetime ISA website.

Lifetime ISA - Cardiff

The Costs of Buying a Home in Cardiff

Mortgage Advice on Home Buying Costs in Cardiff

When it comes to purchasing a home, whether you’re a First Time Buyer in Cardiff or have been in this business before, the process can sometimes be stressful and rather costly. It starts to cost even more when you are buying and selling at the same time. Here is a helpful breakdown of some of the expenditures you will need to consider when exploring your avenues in buying a new home.

What are the Costs Involved in Buying a Home?

Estate agency fees

You should know that you only need to use the services of an estate agent if you are looking to sell a property. The price of these agents can vary, so you must make sure that you look for the best price and leading service before diving headfirst into anything. The cheapest estate agents tend to be online ones who don’t have to maintain the costs of running an office.

If you are not too worried about fees and you are interested in a more personalised and accessible service, you may have to pay an extra 1-2% of the price of your sale.

The fees are usually negotiable, especially when you’re in a “seller’s market”. What this means is that agents are fighting to get your instruction because of the lack of houses on the property market.

Property survey fees

If you are in the market for taking out a mortgage, then the lender needs to know whether the property is worth the amount that you’re paying for it. If you are lucky, your lender may offer you a free service, although they may not send you a copy of the report.

Occasionally the Lender may not offer a free valuation, in this case, you may need to pay a few hundred pounds for the costs of one. Roughly, you can expect to pay double the aforementioned amount if you would like to upgrade to a more in-depth Homebuyer’s Report. The top of the range survey is the most expensive option and you can expect to pay a four-figure sum for those types of survey.

If you want to find out what each different survey consists of, you can ask your Mortgage Advisor in Cardiff, who will advise you and help you make an informed choice. If the property is old or not in the best shape structurally, you should consider upgrading the property survey so you can receive more details of what may need repairing or replacing and when the time comes to move in.

If you are looking for an experienced and dedicated Mortgage Advisor in Cardiff that provides Expert Mortgage Advice, look no further! Get in touch for a free mortgage consultation.

We often find that the cost to upgrade a property survey is a lot less than what it would cost you for repairs over the years. So rather than buying a property without knowing what you’re getting, you could upgrade and end up saving yourself a lot of money in the future.

Mortgage arrangement fees

Generally speaking, the mortgages with the lowest interest rates tend to be accompanied by the highest fees. It can occasionally cost you a fair amount to set up mortgages, with the fee ranging anywhere from zero to a few thousand pounds. Your Mortgage Advisor in Cardiff will recommend the cheapest and most appropriate product to meet your personal circumstances, calculating the total amount to pay over the product term including all fees.

If you are borrowing a larger sum of money, it is very likely that you will want to keep the interest rate as low as you possibly can. However, some may prefer to borrow a smaller amount of money. If you are in this boat, then you should know it’s usually cheaper to take out a mortgage without fees as a rule.

Lender arrangement fees can often be added onto your mortgage total. If you proceed with the choice of adding a fee, then you will be charged interest on the fee which can start to add up over the course of the mortgage term.

Solicitor’s fees

You will require the services of a solicitor to carry out the legal aspects of your property purchase. They need to go over a lot of different things, such as; does the seller actually own the property; who is responsible for maintaining adjoining fences and walls, and whether anyone has lodged any plans (for example to build future links for transport). These things could affect your ability to sell the house on later down the line.

When comparing solicitor’s fees (which could range anywhere around a thousand pounds depending on various factors) you need to make sure you look at whether the quote includes VAT and local searches.

We would recommend that you to be careful when trying to find yourself a solicitor, as not all of them are “on panel” for all lenders. A dedicated Mortgage Advisor can help you decide upon and recommend a solicitor that is best-suited for your circumstances.

Stamp duty

Some purchases are subject to Stamp Duty which is a tax that you will pay to the government. The rules, on which purchases are captured by this tax, tend to change on a whim, so you should always check on the government website to see if this is payable.

Full details can be found here: https://www.gov.uk/stamp-duty-land-tax/

If Stamp Duty is due you will normally pay this at the time of completion, to your solicitor who will make the payment to the government on behalf of yourself.

Mortgage broker fees

Most mortgage brokers will charge you for their hard work, and that amount of the fee will often be a percentage of what the lender pays the broker for the work they do in their name. Most trusted mortgage brokers will only seek to charge you if they are successful in obtaining a formal mortgage offer for you.

Removal fees

Often, people tend to think that hiring a van and moving their furniture out themselves is easier than receiving help from a removal company. We can say for certain that from our experience, removal companies really are experts at manoeuvring furniture around. With that in mind, it is actually easier and less stressful to get them to help you out rather than trying to do it all yourself.

Buying as a Sitting Tenant in Cardiff

Mortgage Advice for First-Time Buyers

During the many years we have spent as mortgage advice experts in Cardiff, we have, together with many of our advisors, witnessed a continuous increase in the number of enquiries made by private tenants in relation to becoming First Time Buyers in Cardiff by buying their current home from their Landlord.

As a private tenant in Cardiff, this is possible as long as you have been presented the offer of “first refusal” by your Landlord. First Refusal basically refers to the fact that the Landlord has given the tenant the option of buying the home directly from them, as opposed to going to the open market. In cases where the tenant has not been offered first refusal or is unsure whether or not such an offer has been made, we always recommend reaching out to your Landlord to confirm.

Why are more landlords offering to sell directly to their tenants?

One of the main reasons for this trend is a change in certain government policies. Buy to Let purchases were previously given a certain tax relief by the Government. This tax relief has now been completely removed and as such, many Landlords are faced with paying higher tax bills than they usually do.

As many Landlords will agree, the act of buying and renting out a home serves as a great long-term investment plan. This has been the case for a long time, and many still find it so in spite of the policy change of recent years and have decided to continue (even with the issue of higher tax bills), keeping the brighter future of the property market in mind.

However, for other Landlords, they have decided to sell their previously rented out homes and move on to other ventures, whether as a result of the aforementioned issue, general financial constraints, or other personal reasons.

Whatever their reasons may be, if you find yourself as a tenant of such a landlord, note that you would not exactly be doing them any special favours as there are a number of merits they will enjoy by selling the home directly to you.

They include the following:

Avoidance of Estate Agent Fees

By selling the home to their tenant, the landlord can save some money that would otherwise be spent paying estate agents.

An Easier Process

If the landlord puts the home up for sale on the open market, would-be buyers will have to schedule times for viewing the property, an activity that would prove difficult with a tenant still occupying the property.

 Refurbishment Cost Reduction

Since the landlord will be selling directly to their tenant while they still occupy the property, there will be no need to set some money aside for paying cleaners, making certain repairs (whether major or minor), and repainting if need be. Such activities would be necessary to make the property attractive to the would-be buyer, a stranger, and not for someone who already occupies the property and sees it as it is.

Absence of Rental Void

Putting the home on the open market and asking the tenant to leave (or in cases where the tenant leaves willingly) places the landlord in a position where they are unable to maintain the steady income they usually obtain from payment of rent – rental void. This is because it could take a while to find a willing buyer and complete the sale. Selling to the tenant however means that the tenant will continue paying rent until they are able to finalise the purchase.

On your part as a tenant in such a situation, here are some of the advantages:

Familiarity with The Home

You know the property in and out and understand the necessary improvements, if any, that need to be made.

Freedom To Make Changes

Buying a home you are already used to and love gives you the liberty to make any changes you want – whether as regards interior decorations or the surroundings – without the usual permission and deliberation involved as a tenant.

Possible Discount

Since you would be saving your landlord some money as the property buyer, he or she could offer you a discount from the open market price.

Absence of Property Chain

For other buyers or movers who own property already, the issue of property chain can bring about some discomfort as a buyer could be waiting for the occupant of the property to move out so they could move in, while that occupant is also waiting for someone else to move out of another property. This has hindered the sale of many properties. As a sitting tenant however, you are not burdened by this as you already occupy the property you plan on buying; you only need to meet lender criteria.

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

Mortgage Advice in Cardiff

How much deposit you need to buy a property depends on your personal situation and what it is exactly what you are looking to do. Here we take a look at how much you might need based on your own circumstances.

Why do I need a deposit anyway?

In previous years, 100% mortgages were readily available and before they were taken away, Northern Rock was offering 125% loan to value mortgages. What this meant is that if you were buying a property valued at £100,000 they would lend you up to £125,000.

Lenders require you to put down a deposit simply to reduce their risk of lending. If they lend you 100% of the purchase price then you happen to accrue any debts leading to property repossession, then they could be at a financial loss, especially if the house prices dip and they can’t make their money back.

You will also find that some say 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 meet your monthly payments. If you are not in a position to save up at least 5% of the purchase price yourself, then it could be argued that you’re not quite ready to take that first step onto the property ladder.

Won’t the government pay the deposit for me?

Unfortunately no, but if you are able to find 5% of your own resources then you could qualify for the government’s Help to Buy equity loan scheme. This applies to new properties only. You put in 5% and the Government loans you up to 20% to make up a 25% deposit. After 5 years you need to start looking at paying the equity loan back possibly by way of a remortgage or from any kind of savings you have been able to make in the meantime.

Is a 5% deposit enough?

At the moment, yes 5% is enough in many circumstances. Not all Lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify. There are lenders out there that would consider you for a 95% mortgage with an average credit score but the interest rates are usually higher in those cases.

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

A majority of the specialist lenders want you to put down at least 15% deposit if you have a history of poor credit once again as above this is simply to reduce their risk in case a repossession becomes necessary. It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not completely impossible to find one.

What about Buy to Let?

You’ve always needed to put down a much larger deposit for Buy to Let Mortgages and most lenders at the moment are looking for at least 25%.

Can I take out a loan for the deposit?

This could be possible but the vast majority of lenders won’t allow this as it would more or less still be 100% lending.

Can someone gift me a deposit?

Yes, this happens all the time. Usually, it’s “bank of Mum and Dad” gifting or other family members but lenders have been known to accept family friends for gifting the money, so long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift as some kind of loan.

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

If you are buying 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 generally speaking you 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 viewed as personal financial or mortgage advice.

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The importance of credit score

Ways to improve your credit score | moneymanTV

First Time Buyers or any applicants with high credit scores are more likely to get accepted for a mortgage over applicants with a lower credit score. Lenders study your application carefully in order to ensure that you are able to afford a mortgage with them. You will never be guaranteed a mortgage and this is because every lender has different lending criteria and the chances of you matching every single one of these is unlikely.

Each lender has developed their own way of identifying whether you match their criteria or not. It is your Mortgage Advisors’ job to try and find you a lender who has the most criteria you match up to. They will also try to find the best deal for your personal circumstances. Whether your advisor is from your bank, the mortgage lender or a Mortgage Broker in Cardiff, your advisor will try their best to match your personal circumstances.

By going with a Mortgage Advisor in Cardiff, you will always know what is going on and will always be updated if anything changes or something comes up. We are a dedicated mortgage broker, here to help improve your credit score and help secure that perfect mortgage deal. Whether you are a First Time BuyerMoving Home or Self Employed, we think that you would benefit from fantastic Mortgage Advice in Cardiff.

Credit Score Mortgage Advisor in Cardiff

There are many different credit reference agencies in Cardiff that you can go to, with the most popular are Experian and Equifax. Before you make a decision, research each agency as it is a possibility that some of them could be holding incorrect data and discovering any discrepancies will be very beneficial to you.

Improving your credit score can be difficult but there are ways you can do this effectively in a manner that allows you to reap the rewards down the line.

Avoid unnecessary credit searches:

Making multiple credit searches could actually have a adverse impact on your credit score. Price comparison websites are risky as they can also damage your score, so be extra careful. We also advise you to not apply for credit during the mortgage process as this may signify to the lender that you are struggling financially, even if you are not. It is a good thing in the long term though as it shows that you are reliable in making recurring payments.

Check that you are on the voters roll:

Another simple but useful tip for improving your credit score is by registering for the Electoral Roll. In the eyes of the lender, it shows stability which they will favour. When registering, you must spell your name correctly and set your address to your current one and not a previous one. If you are not registered then you definitely should do this asap, as it’s quick and easy to set up and it could have a really positive impact on your credit score. Make sure everything is correct though to maximise the benefits!

Don’t run close to your maximum limit:

Maxing out your card each month is not recommended and is bound to reduce your credit score. The lender looks at your credit card statements to check whether or not you have paid off balances by the due date. If you are meeting due dates and have never exceeded overdraft limits then a lender will see that you are more than capable of handling your finances well and it could prove beneficial towards your mortgage application.

On the flip side, if you don’t manage your finances carefully then the lender will believe that you don’t take payments seriously, thus reducing your chances of being accepted by them for any amount.

Check your address history is keyed correctly:

We often find that people who have moved house have not told their previous credit provider, which means that on their records you still are shown as living in the other property. Make sure you are on top of this as lenders don’t like to see your address history all mixed up and shown as living in two different places when you are not.

Remove financial links to others:

Some people, without even realising, have a family member or ex-partner connected to their financial commitments. It’s worth checking just to be sure, as you can’t get the financial association removed if the account is still live. If you are trying to remove any of these links then you should contact the credit reference agencies and make a request with them directly.

Applicants see credit scoring as being an unfair approach to accessing whether or not they can obtain a mortgage. Lenders disagree as this method provides a faster, fresher approach to their system of credit scoring. It’s also a lot cheaper for the mortgage lender and it provides always provides a result that they deem trustworthy.

If you want to get ahead of the game, you should send an up-to-date copy of your credit report in advance to your Mortgage Advisor in Cardiff. Starting early will increase your chances of being accepted for a mortgage the first time. The more that your advisor knows about your financial situation the better your chances will be.

Also, there are still some lenders that will want to do the process the old-fashioned way and will prefer a manual approach. They will have certain rules that they stick by about the number of defaults and CCJs that they will allow.

Buying a Home with Credit Card Debt in Cardiff

For some, buying a home whilst having credit card debt can seem like an impossible task. However, if you speak to the right Mortgage Broker in Cardiff, it can possibly be achieved. Read this case study to see how…

Credit Card Debt Mortgage Advice in Cardiff

Grant and Sarah really needed a bigger home in Cardiff due to their growing family but unfortunately had accumulated some unsecured debt over the years in the form of personal loans and credit cards.

Part of the reason for this is Grant was self-employed and had experienced a bad payer which put him back a little and for a while they struggled to make ends meet because Sarah had taken a career break to raise their family.

They had got onto the Cardiff property ladder in their 20’s and to be fair, some of the debt they had built up was because they had invested in their home and built a sizeable extension to the side of their property.

This had added value and they were surprised when an Estate Agent in Cardiff advised them their house was worth £20,000 more than expected.

Putting a Home on the Cardiff Property Market

They felt nervous about putting their home on the market not knowing whether they would be able to borrow enough for the move up the ladder, so they connected with us early on.

Their credit scores were not perfect but whilst they had missed a few payments over the years they had no defaults or county court judgements and had kept up all payments in recent years.

I was able to advise them that many mortgage Lenders in Cardiff will ignore unsecured debt when calculating how much you can borrow for your next mortgage providing we can evidence that there are available funds to repay that debt prior to completion.

This worried Grant and Sarah because they did not have lots of cash in the bank, they would be repaying the credit cards from the proceeds of the house sale.

Mortgage Advice in Cardiff

I advised them this would not be an issue. When their property was sold I told them their Estate Agent would send them a document called a “Memorandum of Sale” to confirm the agreed offer.

With this document we would be able to demonstrate that not only did Grant and Sarah have enough equity from their sale to put down a 15% deposit on their onward purchase, they would also have enough funds to pay all the fees associated with moving and pay off all their debt.

We got an Agreement in Principle early on in the process to give them the confidence that their application would be successful and a few months later they had sold and went on to buy a lovely new family home.

Get in touch with a Mortgage Advisor in Cardiff

If you have credit card debt and are looking to obtain a mortgage either outright or by selling the one you own, please feel free to get in touch with a Mortgage Broker in Cardiff. We can also help obtain an Agreement in Principle, usually within 24 hours of the appointment.

Cardiffmoneyman.com & Cardiffmoneyman 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.
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