Why did Toby and Pippa want independent financial advice?
Toby and Pippa contacted us after a conversation with Toby’s parents, who were existing clients of ours.
They were fed up of living in rented accommodation and wanted to buy a home of their own.
However, both were worried that with only a small deposit, they wouldn’t be able to get a large enough mortgage.
How did we help?
We explained to Toby and Pippa that they would be in a stronger position if we assessed their finances before they started house hunting.
They were happy with this, so we met to discuss their options.
Both Toby and Pippa were employed in reasonably well-paid jobs and they’d managed to save a few thousand pounds which they would need to cover their deposit, mortgage fees and legal costs. They were still worried though that they had not saved enough.
As first-time buyers they were unsure of the process. We therefore took them through each stage, step by step but recommended that we submit a Decision in Principle (DIP) to a mortgage lender. This allowed us to confirm that they would be able to get a mortgage and how much they could borrow.
We were also able to give them an accurate estimate of how much they could borrow.
The results of the DIP were better than either Toby or Pippa expected. The amount they could borrow was enough to buy in their preferred location and the monthly payments were about the same as their current rent, which was easily affordable.
Delighted with the news that their small deposit wasn’t holding them back they started house-hunting.
A few weeks later we got a call from Pippa telling us that they’d had an offer accepted on a property. The vendor of the property was keen to move quickly, which is why they had chosen to accept Pippa and Toby’s offer. As first-time buyers there was no chain and the work we had done, getting them approved for a mortgage, proved to the vendor that they were in a position to proceed.
We met again and following a thorough search of the thousands of mortgage products available to us, completed a full mortgage application. We also discussed with Pippa and Toby the merits of different types of mortgage products. They opted for a fixed rate which gave them certainty that their payments wouldn’t rise for at least two years.
Within three weeks they had a formal mortgage offer and a month later they moved in. During that period we talked Pippa and Toby through their insurance options.
Neither earned enough to be able to afford the mortgage payments on their own. We therefore recommended that, although they are young, they take out protection in the form of Life and Critical Illness Cover to ensure that the mortgage is repaid in full should either of them die or suffer a serious illness.
Being young, in good health, and non-smokers the premiums were very affordable, which meant Pippa and Toby were happy to accept our recommendation.
How have Pippa and Toby benefited from taking financial advice?
Very simply, they have now bought their first home.
The fact we completed a Decision in Principle gave them the confidence to go house hunting, while reassuring the vendor that they were in a position to proceed.
Finally, because we chose a fixed rate mortgage, they know their payments won’t rise for at least two years and if the worst happens, with one of them dying or becoming seriously ill, the mortgage will be repaid.