If you’re a first time buyer, you’ll want to be confident you’re making the right decisions for you. And the key to this, and to overcoming first time buyer anxiety, is to be fully informed about your options. This article explains everything you need to know so you can plan your route to getting on the property ladder.
First Time Buyer Deposits
Saving for a deposit can be a major concern if you’re hoping to buy your first home. But instead of worrying about it, take action and plan how you’ll get there.
- Set a budget: Go through your finances so you know exactly where your money is going. Assess where you can cut back your spending, then work out a budget and save as much as you can each month. Not only will you be building up your deposit, you’ll also be able to demonstrate to potential future lenders that you manage your finances well.
- Turbo-charge your savings: And if you’re eligible, it’s a wise move to open a Lifetime Isa. They’re for those aged 18-39 years old and are designed for buying a first home or for retirement. You can put in up to £4,000 a year until you’re 50 years old. And you’ll get a 25% bonus on your savings of up to £1,000 per year. Make sure you read the t&cs to ensure it’s right for your circumstances.
Did you know there are schemes designed to help first time buyers get their foot on the property ladder? So, it’s essential you read up on your options– one of these schemes might just be perfect for you. These schemes include:
- Shared Ownership: With Shared Ownership, you buy a share of a property of between 10%-75% and you pay rent on the rest.
- Deposit Unlock: With this new scheme, devised between the housebuilding industry and lenders, you can buy a new build home from participating home builders with a 5% deposit.
First Time Buyer Mortgages
Find the idea of mortgages daunting? Then instead of sticking your head in the sand, speak to an expert mortgage adviser who will explain everything you need to know. They’ll cut through the jargon and talk you through your mortgage options in a way that’s easy to understand.
And don’t make the mistake of thinking you don’t need to investigate mortgage options until after you’ve put in an offer on a property. It’s important to do your research into mortgages sooner rather than later. You’ll get a realistic idea of how much you’ll be able to borrow based on your circumstances. Plus, you might find that you’re able to buy your first home much sooner than you thought.
Can I Get a Mortgage With Debts?
It’s a common misconception that having debts automatically means you won’t be able to get a mortgage. Lenders will look at your finances as whole when they decide whether to lend. Also, lenders will view different types of debt differently, for example whether it’s student loans, credit cards or pay day loans. Again, it’s a good idea to speak to an expert mortgage adviser about your options. It may be the case that it’s better for you to pay off the debts before buying a house. Or it may be that your debts are unlikely to have a big impact on your ability to get a mortgage.
First Time Buyers: How Do I Boost My Credit Score
When it comes to applying for a mortgage, one factor the lender will use when making a decision on whether to lend to you or not is your credit rating. This may also influence how much they agree to lend you and sometimes how much interest to charge too.
So you should check your credit reports. Credit reference agencies compile these reports. The main credit reference agencies are Experian, Equifax and TransUnion; each of them hold a report on you. And you can check what’s contained in them for free online.
You Don’t Have To Do It Alone
Have you considered taking the plunge with someone else, either by buying a property with them or by asking them to act as a guarantor on your mortgage?
- Joint mortgages: Could you cut the cost of becoming a homeowner by buying a home with someone else, like a partner, a friend or a family member? With two incomes you might be able to borrow much more. And if you’re both putting money towards the deposit you’ll have more to put down too. Although if you’re considering this, you and the other person should get legal advice first and you should speak to an expert mortgage adviser too.
- Guarantor mortgages: And have you thought about guarantor mortgages? This is when a parent or close family member takes on some of the risk of the mortgage by acting as a guarantor. It usually involves them offering savings or their home as security against the loan. Plus they’ll typically agree to cover the mortgage payments if the homeowner defaults. You may be able to borrow more if choose this option but your guarantor will need to think about the risks to them. And the lender may require them to have received legal advice.
We know this might seem a lot to take in, so if you do have any questions or want to learn more about how we can help, please get in touch with one of our first time buyer mortgage specialists, who are on hand to help guide you through the process.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is £99.