Before applying for a mortgage there are some important things to take into consideration first. Buying a home comes at a considerable cost, careful thought should be given in preparation for making that all-important decision.

Preliminary checks

There are some preliminary steps that you can take to facilitate a smooth mortgage application process, and these include the following.

Consult with a mortgage broker

By speaking with a mortgage broker as one of your first steps, you will be able to better ascertain how much you can borrow and what the monthly repayment will come to. You will need this information to guide you in choosing the right house to match your budgetary constraints. There’s no point in spending a lot of time in searching for and finding your dream home only to realise that it’s beyond your budget.

Check your credit score

Mortgage lenders will do a credit search on you to see if you have missed any payments. To be prepared, you can do your own credit score pre-check using services like Equifax or Experion. By having an idea of what they will find, you can be ready for any unexpected nasty surprises.

Passport check

Make sure that your passport is currently up to date. This may be an obvious thing to say, but you would be surprised by how many people start the mortgage application process only to discover, to their dismay, that their passport has expired, which can then cause delays and issues with the application.

Bank statements check

Like with the passport, to avoid issues down the road, check that your bank statements are up to date and have the correct address on them. Again, as with the passport, you may be surprised how common this mistake is.

Be prepared for fees

Be prepared for the extra costs that you will incur when applying for a mortgage. The main fees will include:

• Deposit
• Stamp duty
• Valuation fees
• Arrangement fees
• Solicitor fees
• Legal fees

In addition, when you know how much you are able to borrow, think about if this amount is right for where you are looking at buying? What type of home are you thinking of buying? A new build, freehold, leasehold, or off-plan? This is important to know because they each have different criteria and costs that will affect the mortgage application.

What will the fees cost?

Of course, the fees you will incur will depend on things like the specific house that you are buying, but as a rough guide, you can expect to pay out something along the lines of the following.

The valuation cost is the first upfront payment you will need to make. You can expect to pay about £200 – £400, but check with your lender first because some lenders offer free evaluations.

The valuation price range reflects the fact that valuations differ in scope, depending on the property that you are thinking of buying, something that your mortgage broker can take you through in more detail. A more in-depth and thorough valuation will tip the cost to the upper end of the scale.

The solicitors’ cost (£300) and legal fees (£2000) will come to about £2,300 in total.

Although this doesn’t apply to every mortgage, some have something called arrangement fees. These are usually about £1000 but can often be added to the mortgage balance. However, if you decide to do this, bear in mind that you will then be paying interest on this fee, effectively making it a loan.

Stamp duty is a land tax that you pay. First time buyers are exempt from stamp duty for properties below the £300,000 threshold, a saving of about £5,000. For all other buyers, the percentage of duty charged will depend on the value of the property and this can easily be clouted with any online stamp duty calculator.

Brokers fees will be anything up to about £1,000 for their services. Be sure to shop around though, because some brokers don’t charge a fee for their advice.

Finally, although not a cost in the conventional sense, make sure you have a small sum put aside for the housewarming bash!

What is the best mortgage for first-time buyers?

There is no specific type of mortgage that is best suited to first time buyers. Having said this, historically speaking, first-time buyers tend to gravitate towards fixed-rate mortgages because they are looking for stability in the early years of their home buying. By knowing exactly what their mortgage will be each month, they can better plan their monthly and yearly budgets, something that was easier to do when renting at a fixed rate.

It’s best to speak with your mortgage advisor about this because they can discuss your near future with you. If, say, you are planning on having children soon or moving, then perhaps a more suitable mortgage could be found to suit your circumstances.