Active Way To A Dream Home

This is the process we go through to get you your dream home.  It sounds like a lot of work, and it is, but we are more than happy to do as much of this for you as we can.

  • Follow the Active Assessment Process
  • Broker: Strategy call taking roughly 20-30 mins*
  • Broker: Fact find completion – obtaining information from you 45-60 mins*
  • Discussing all insurance and options available with your mortgage.
  • You: To provide documentation (listed below, “under documents to have”)
  • Broker: Assess your income and expenditure to make sure you meet the Lenders criteria – 24-72 hours* (It’s the Lenders responsibility to assess whether the mortgage is affordable).
  • Broker: To provide Advice, a recommendation and a quote.
  • Broker: To submit an Agreement in principle i.e. Submit for a credit check for initial agreement from the lender recommended.
  • You: Find your dream Home and contact the Estate Agent with your proposed offer.
  • Broker: To submit the full Mortgage application .
  • Lender: Instructs the Valuation and commences mortgage underwriting.
  • Lender: Provides a Mortgage offer, typically 17 days after application.
  • Solicitor: Moves you towards Exchange, when you become legally bound to purchasing.
  • Solicitor: Date agreed for Completion i.e. moving in. Usually 2 weeks after exchange.

 

At Active Brokers we have the best results for the following types of clients:

  • Limited company directors.
  • Retained profit i.e. not drawing all dividends.
  • 2+ years trading (No first year losses).
  • Assets outweighing liabilities on balance sheet.
  • 10%+ deposit.
  • Savings to cover the costs of buying/moving.
  • Clear credit history** for the last 24 months i.e. no missed payments, defaults, CCJs etc.
  • If you do have poor credit** having a 15% deposit saved.
  • Having all documentation at the beginning of the process.

(listed below, “under documents to have”)

Active Assessment Process

Use the below to work out your current situation:

  • You need a deposit Minimum 5%, ideally 10%+ to open up the larger mortgage market.
    • Gifted deposits must be from mother, father, brother or sister
    • Spouse’s relative gifting deposit is okay with some lender
    • Equity from sale.

http://activebrokers.co.uk/a-short-guide-to-valuations-and-surveys/

    • Lender arrangement fee £0 – £1999 Dependant on interest rate.
    • We charge a fee of up to 2% of the amount borrowed.  Up to £995.00 is payable on application and the rest is payable on offer of the mortgage
  • Property Value Minus Deposit = Mortgage Amount

 

Example how to use the above
Property Value £211,000£223,000
Deposit £11,000 = 5%£23,000 = 10%
Stamp Duty £1,720£1,960
Solicitors £1,300.00 Estimate£1,300.00 Estimate
Valuation £500.00 Estimate£500.00 Estimate
Lender Arrangement fee£999.00 Estimate£999.00 Estimate
Broker Fee £995.00 Estimate£995.00 Estimate
Total Funds to Purchase £16,514 Estimate£28,754 Estimate
Mortgage Amount £200,000£200,000

 

You need to have Total Funds (Deposit and costs) available before step 8 above.

Quick Income Checks

Sole Trader = Lenders will use your Net profit after tax (April to April)

  • You’ll need an SA302 (Tax Calculations) and Tax year overviews

Limited Company Director = 2 options can be used

  • Net Profit after Tax + Salary
    1. Accounts required
    2. Assets must outweigh liabilities on balance sheet
  • Salary + Dividends
    1. SA302 (Tax Calculations) and Tax year overviews
    2. Accounts required

The benefit of using net profit is you do not have to withdraw all your dividends which is more tax efficient, please speak to your accountant for confirmation based on your business.  

Property Income can be included depending on the lender

  • Usually has to be received for at least 2 years.
  • Possible with 3 months bank statements
  • We would suggest discussing this with us further.

Employing a partner or Employed by a Family member

  • You  need 3 months payslips and correspondence bank statements

Income Multiples

Please only use these as a rough guide. Not all Lenders use the same Income multiples and even then your expenditures will be taken into consideration along with affordability. It is the Lenders responsibility to assess whether the mortgage is affordable to you.

 

  • If your mortgage term is less 25 years
    • We would suggest discussing this with us further.

 

First time Buyer 4.5 multiply combined family Income (based on a 25 year term)

    1. 4.5 x £45,000 = £202,500

 

Moving Home it could be possible to obtain 5 x income (based on a 25 year term)

    1. 5 x £45,000 = £225,000
    2. We would suggest discussing this with us further.

 

Lenders are assessing that your income is sustainable

  • It is possible to apply for a mortgage with accounts for 1 year accounts
    • I.e. a full 12 months trading.
    • However, previous experience in the trade is preferred when there is only 1 year worth of accounts.
  • We would suggest applying with 2+ years accounts
    • If you have had a loss in the first of the two years or
    • If you have 1 year of sole trader accounts and 1 year of Limited Company accounts.
  • Most high street lenders will average your last 2 years Income.
  • If your latest year’s accounts have decreased
    • Some Lenders will use the latest year and not average.
    • However, some Lenders may decline you.
    • We would suggest discussing this with us further.
  • If your latest year accounts are higher than the previous years’ accounts
    • Then a select number of Lenders may consider your latest years accounts if presented correctly.
    • We would suggest discussing this with us further.

 

We would suggest discussing the following with us further.

  • Changes in business structure
  • Multiple income streams
  • Changes in directors
  • Previous liquidations

 

Documents to have from the beginning of the process

 

  1. 2 years Company Accounts and/or SA302’s
  2. Employed partner 3 months payslips.
  3. 3 months bank statements (will be required by the lender)

 

  • Must show name, address, sort code, account number
  • Avoid overdraft usage for 3 months leading up to mortgage application

 

Debts: Loans, Credit cards, HP, Car finance etc.

 

  • These will affect the above income multiples, We would suggest discussing this with us further.
  • We need balance owed, monthly repayment, remaining term
  • Your credit report can provide this Experian, Equifax or

 

Adverse credit: Missed payments, Defaults, CCJs ideally over 2 year ago

 

  • If inside by 2 years We would suggest discussing this with us further.
  • We need your credit report Experian, Equifax or

Active Brokers Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fca.org.uk/register) under reference 488342.
Your home may be repossessed if you do not keep up repayments on your mortgage.

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