Your First Steps As A First Time Buyer
To Successful Home Ownership
The biggest problem facing a first time buyer is getting a mortgage and being able to afford the repayments. Obtaining any mortgage has become very challenging since August 2007. Prior to August 2007 all lenders were only to happy to lend money to anyone looking for a mortgage or a remortgage. Today mortgage providers have reduced the number of mortgages products offered from 21,000 different mortgage rates before 2007 to around 1050 today. They have also tightened their lending criteria to a point where all borrowers are now required to jump through hoops to obtain their first mortgage.
Until recently it was difficult for first time buyers to buy a home as they needed a deposits of at least 25% to put down on any home. The Government created the Help to Buy scheme to help hard-working people buy their own home The Help to Buy Scheme has helped many buyers to purchase their homes as the they only need a 5% deposit on properties up to £600,000.
Below is a quick mortgage guide to getting a mortgage along with some dos and don’t s to obtaining your first mortgage .
As A First Time Buyer You Should Work Out What You Can Afford
First time buyer should not overstretch themselves. Work out what you can afford in mortgage repayments, then add a margin to take account of probable interest rate rises in the near future. Don’t bank on getting a decent pay rise, a major inheritance or a win on the lottery. Work with the money you have, not what you want.
Consider The Extras
The cost of your property doesn’t stop at the purchase price. Remember to include surveyor’s, solicitor’s, land registry and mortgage arrangement fees. You’ll also need money for any building work, fixtures, furnishings, decorating, buildings and contents insurance – even setting up new utility accounts.
Take A Reality Check
Start by studying your credit report, which lists your credit accounts and repayment history. Lenders look at it when they decide whether to make you an offer and it can influence how much interest they charge, so if it’s littered with missed repayments or shows that you’re already stretched, you need to do some work before you apply for a mortgage. View your Free Experian Credit Report Online
You Need To Save, Save, Save
As a first time buyer you will need at least 15 per cent of your new home’s purchase price in cash if you want any choice of mortgages so you will need to save money – and 30 per cent will give you a much better chance of a good deal. Save every penny until you’ve got a decent deposit.
Swallow your pride
Around 80 per cent of first time buyer s under 30 get financial help from their parents or other relatives, according to the Council of Mortgage Lenders*, so don’t be too proud to ask. Even if they can’t afford to contribute to the price of your home, they may be happy for you to move back into the family home for a while, so you can bank the money you were spending on rent.
Consider Alternative Options
If you can’t afford to go it on your own, then you might want to consider buying with friends or joining a shared equity scheme, in which an organisation such as a housing association retains a proportion of the value of the property you buy – you may need to pay some rent as well as your mortgage if you take this route. The Government offers similar schemes for key workers. Your local council or housing association can tell you what’s available in your area.
Make Yourself look Attractive To The Lenders
Lenders want to see that a first time buyer is a reliable borrower who will make their mortgage repayments on time and in full and can comfortably afford a mortgage. So correct or challenge any errors on your credit report, make sure you never miss a repayment, try to reduce your debts and close accounts that you don’t use – they could be a target for an identity fraudster. Lenders also like stability, so it’s a good idea to register to vote, especially as they use the electoral roll to check that you live where you say you do.
Do Your Homework And Research
Spend time on Internet personal finance sites and reading newspaper supplements or specialist magazines until you have a good idea of what’s available. You should also visit price comparison sites such as Lower My Bills .co. uk for an idea of the kind of offer you might get.
Finally, as a first time buyer it’s worth talking to an independent broker who has access to the entire mortgage market and can give professional advice on what might suit you best.
You Should Be decisive
Only apply when you’re clear which first time buyer mortgage you want – taking the scatter-gun approach in the hope that someone will say yes could actually damage your credit rating and your chances. Every application triggers a search of your credit report that leaves a record. If other lenders see a lot of these, they may assume you’re desperate or even suspect a fraud. If you want a clear indication of the type of deal you might get and you know the interest rate will be liked to your credit score, ask for a quotation search instead.
It’s Important To Manage Your Credit Status
Before you make that crucial mortgage application, check your credit report again. To view your Free Experian Credit Report Online . It changes over time, as your circumstances change, so you need to be sure that it reflects all your hard work and shows you’re a desirable borrower. Then go ahead – and good luck!
Your thoughts and comments about your experiences of being a first time buyer in today’s mortgage market are welcome below.