For many, getting your foot on the property ladder can sometimes seem impossible. Even if you do manage to scrape together enough for a deposit, the process of securing your first property is full of pitfalls and paperwork. But the online mortgage broker and lender Habito is seeking to change that.
Its new product, Habito Go, has been designed to give first-time buyers a better chance of securing a property. The premium service involves a bridging loan, which means that if you’re eligible, Habito will transfer in full the amount you need to make an offer on your potential property. And that means you can make a cash buyer offer, which is generally considered much more attractive to sellers and therefore more likely to be accepted.
Starling personal customers who want to use Habito Go can kick the whole process off from the Starling Marketplace. As with all our partners, Habito is part of what we call The Starling Promise: we make sure you don’t pay more for products on the Starling Marketplace than you would by going direct to our partners.
How does Habito check eligibility?
Habito won’t do any hard credit checks to see if you’re eligible for its bridging loan. Hard credit checks are the ones that can impact your credit score. The soft credit check that Habito does doesn’t make a difference to your credit score. Habito does an affordability check to see what you can borrow and a virtual property valuation to check that the property you’re interested in is suitable to secure the loan against. You’ll know whether you’ve been approved for Habito Go within 24 hours.
How does it work?
Once you’ve been approved for Habito Go, you can make your offer as a cash buyer. If your offer is accepted, Habito will apply for your mortgage for you, which will involve a hard credit check. If the mortgage comes through before completion, the date when everything is tied up and you get the keys, the mortgage will be paid to the seller. But if the mortgage is delayed or you’d prefer to move more quickly, you can use the Habito Go loan, which will be transferred directly to the seller. Habito will then arrange a remortgage for you and that’s how you pay back the money. Only first-time buyers are eligible for Habito Go.
On average, it takes 4-6 weeks for a mortgage to come through. But it can take longer and if that’s the case and the seller becomes impatient, they could pull out and go with another buyer. If you choose to use Go, the pre-approval process will mean that you can use the bridging loan to pay the seller in as little as 10 days. Following this, Habito will arrange a remortgage for you.
What makes cash buyer offers better?
Being able to make a cash offer can strengthen your hand in negotiations when buying a home. Some vendors regard cash buyers as being able to make faster purchases with more flexible move-in dates.
Once Habito Go approves you for the bridging loan, there’s no obligation to use it. But if you do think it’s the better option, that’s when Habito will do a physical property check and comprehensive conveyancing searches. Both are requirements for buying a property with a loan or mortgage and can be completed in as little as 10 days with Habito.
How much does it cost?
You have to pay Habito once you complete, that’s the term for finishing the process of buying a property. No property means no fees. For those who do become homeowners, the fee is 1.95% of the total property price. No matter if you use your mortgage or use the Go loan and arrange a remortgage, the fee stays the same. If you do use Go before your mortgage comes through, you pay an additional 0.5% of your loan per month. You only ever pay for the number of days you need, they won’t round it up to a full month.
The Habito Go service also includes a solicitor who carries out the searches and paperwork for you, a chartered surveyor who checks that the physical state of the property, known as a survey, and a mortgage advisor who guides you through the negotiation with the estate agent and the loan repayments.
What’s the smallprint?
The Habito Go loan is secured against the property you buy. That means if you can’t pay it back, you would have to sell the property and pay back the loan using the money from the sale - or your home might be ’repossessed’ by Habito.
“The rationale behind launching Habito Go is to democratise housing in the UK by giving first-time buyers the same level of speed and certainty as cash buyers. Sellers really value that and we hope buyers will be able to use it to their advantage,” says Romney Taylor, Chief of Staff at Habito who has led the development and launch of Habito Go.
Full details and pricing can be found on the Habito website.