Home Buyers

If you have previously owned a property and you want to buy a new property, then you could be classed as a “second time buyer” for mortgage purposes.

If you sold your previous property and made a profit then hopefully you will have saved this money to be used as a deposit. The bigger the deposit you have the better; firstly because your monthly repayments will be less and secondly because mortgage lenders look more favourably on people borrowing a smaller proportion of a property’s value, called the loan-to-value (LTV). The smaller the LTV you need, the more competitive the deals available to you. Rule changes mean even with a decent deposit, anyone wanting to get a new mortgage now has to prove they can afford monthly payments. If you’re planning on buying your second home, these are the three factors the mortgage provider will use to help decide what amount they will offer.

You’ll need to provide bank statements and payslips to prove how much you earn. Don’t forget to include any extra money you receive such as bonuses, benefits, investments or pensions.

The lender will want to see information about any loans or credit card debts, how much you spend on bills and insurance, plus an estimate of your day-to-day expenses. This could include what you spend on clothes, going out or childcare.

Your life at the moment might seem pretty stable, and your finances consistent from month to month. However, the mortgage lenders now need to stress test to see how you’d cope if things change. This includes things like a rise in interest rates, losing your job and even having a baby.

At the Independent Mortgage Store we can review your details, complete an affordability test and confirm what lenders will offer you then have your mortgage confirmed in principle to ensure you are fully prepared. If however you are planning on retaining your current home and buying a second home this will a require a different set of criteria. Contact us here to clarify what requirements are needed for this option.