Who’s who on your mortgage journey
7th June 2019
Just found your dream home? If you’re a first-time buyer there are five key players you need to know who could help you get your hands on the keys.
The estate agent
The first one you’ll probably come across is an estate agent. When you spot a home you like the look of, they’ll show you around.
Let the estate agent know if you’ve got a Mortgage in Principle. This document shows what you could afford - in principle - from a mortgage lender. It’ll show them that you’re serious as you’ve already started sorting out your finances.
Make sure you’ve done your homework before making an offer. Check out the prices of similar homes for sale in the area, as well as sold house prices.
The estate agent will pass your offer on to the seller. It’s worth bearing in mind when you’re negotiating the price that the estate agent gets a commission from the seller, so it’s in their interest to sell the home for as much as possible.
The estate agent will continue to act as the go-between for you and the seller while the legal side of things are being taken care of.
And, when everything’s done, the estate agent will give you the keys.
The mortgage lender
Unless you’re a cash buyer, another player you’ll probably deal with is a mortgage lender.
Mortgages have been around for centuries and started becoming popular when building societies emerged in the 1840s.
You’re likely to get your mortgage from one of around 90 lenders in the UK, most of which are banks or building societies.
Lenders make money by charging you interest on the mortgage, as well as fees for getting one.
You’ll want to make sure you know exactly how much you’ll be paying for your mortgage.
One mortgage might have a high interest rate and low fees. Another might have a low interest rate, but high fees. And then there are cashback offers to take into account.
So understand the true cost of a mortgage before you choose one.
The mortgage broker
With so many mortgages on the market, you might want to consider using a broker to help find the right one.
A mortgage broker is qualified to give you mortgage advice, and will recommend the mortgage which suits your circumstances best.
Many have access to exclusive deals, so you could have a better chance of getting a mortgage that’s right for you.
Using a broker will save you all the hassle of searching for your mortgage yourself.
There are high street brokers, some that just work on the phone, and a few which are online, like Trussle.
The lender pays a fee known as a 'procuration fee' to brokers for arranging the mortgage with them.
Many brokers charge the borrower a fee on top of this for their time and service.
Trussle is free for borrowers - we only get a fee from the lender.
Buying a home involves a lot of legal work. Either a solicitor, property lawyer, or licensed conveyancer can do it for you.
Conveyancing fees vary and it’s a good idea to ask friends and family if they can recommend someone.
Your solicitor will gather information from a wide range of sources - such as the local authority, utility companies, and the management company if you’re buying a leasehold property.
They’ll go through all the paperwork and ask for further information if they need it.
Your solicitor will also be in touch with your mortgage lender - making sure they’re in the loop after your receive your mortgage - and eventually they'll arrange the transfer of your deposit.
They’ll keep in touch with the seller's solicitor to make sure everything’s running smoothly with the sale, and sort out a mutually convenient date for 'exchange of contracts'. That's when you and the seller sign documents to confirm the sale.
And your solicitor will arrange a mutual date for completion, which is when the seller moves out and you get the keys to your new home!
When you apply for a mortgage, the lender will insist you have what’s known as a mortgage valuation done. This is carried out by a surveyor.
They’ll check whether the home you’re buying is worth the amount you hope to borrow. This is important to the lender, because your new home will be the security for the mortgage.
They’ll also look for any significant defects, such as subsidence, which might affect its value.
You usually pay for the mortgage valuation. Your lender might offer you a free one as part of their deal, but remember it's important to consider the true cost of the mortgage and not just be lured in by incentives such as a free valuation or cashback deals.
For mortgage purposes you must complete a standard valuation of the property, even if you decide to arrange for a surveyor to do a much more comprehensive survey such as a homebuyer or full structural survey.
It’s up to you whether you arrange an in-depth one, but they can be a really good idea. If the surveyor finds something serious, the lender can place something called a 'retention' on mortgage funds, which means they won’t release the money you need to buy the property until this work is done.
At this point, you must decide if you want to continue with the purchase, and ask the seller to put the issue right before you proceed.
You can also consider lowering your offer if you'll have to pay to fix the problem after the sale is complete.
It’s best to have a more detailed survey carried out sooner rather than later. If your surveyor finds something you’re really not happy about, like subsidence, you might decide that the property isn’t for you and pull out. After all, you’re still under no obligation to buy it at this stage.
Then you can start looking for something else that really is your dream home.
Bear in mind
Your home could be repossessed if you don't keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.