First Time Buyer Mortgage Advice
Everyone knows that young first-time buyers need all the help and mortgage advice they can get. The first step onto the property ladder has became harder to take over the last few years with many mortgage lender lowering the number of different mortgage products available. Together with this the remaining products require a large deposit in the area of 20-30% which a lot of people struggle to afford.
With this challenging financial environment it is important that first time buyers maximise their chances of getting that mortgage they need and should be far more appealing to the big financial institutions if they follow some sound mortgage advice.
Do the Maths
It is important to do your maths first before even looking at a house or thinking about which mortgage product to get.
First time buyers should sit down and work out your monthly outgoings and where your money is going. How much could you afford to spend on the repayments? Remember to factor in things such things into the budget as nights out and fun activities. If you don’t then you might soon find yourself with a house but miserable because you can’t afford to go out and have to sit in every night.
Improve Your Credit Score
It makes sense that mortgage companies and big banks want to lend to people that will pay them back. In order to show that you are a good applicant for their mortgage you should check that you have a good credit score because, believe me, the banks will certainly be checking.
It is a good idea to pay off smaller debts and loans that you have outstanding. Not only does this decrease the amount you have outstanding but it shows that you have a history of paying off loans.
Another good tip is to make sure that you are on the electoral register. This is a big tick on your side when applying for anything and will definitely show up in even the most basic check.
If you want to check your own credit score then they are a number of companies that do this for you including Equifax and Experian. Be aware though that checking your credit rating too often can DECREASE your credit score, so only do it once every six months at the most.
I know this one sounds obvious but it is important to save as much as you possibly can to get the biggest deposit you can. Gone are the crazy days of 100% or even 110% mortgages so you need to save, save, save.
As well as allowing you to get on the property ladder a bigger deposit will allow you to get a mortgage at a lower interest rate. This could bring added savings across several years as most of these incentives last for the first three to five years of the mortgage.
The Chicken and the Egg Syndrome
Should you try to get a mortgage deal first and then look at houses or vice versa? Well they are a number of views on this but personally I think you should get a mortgage in principle first.
You’ve already followed steps one and two so should have a reasonable credit score and some figures to show the bank, this definitely helps. They should then be able to offer you a mortgage in principle and a figure that you could spend on a property. This is the way to go because there is no point in looking at properties that are out with your price range; it’ll just depress you and leave you disappointed at the houses you can actually afford.
Let me be the first to say it. Your perfect house doesn’t exist. Except it.
Whether you’ve got a budget of £100,000 or £1 million there are always some compromises. Always. Therefore it’s your job to prioritise these into order. Is the catchment area for the kid's school more important that a garden, is too close to a busy road acceptable because the property has an extra bedroom?
These are your decisions to make but ones that should be done before viewings and not just reacting emotionally to every piece of real estate viewed.
With the property market the way it is there are a number of schemes run by house builders to help first time buyer get onto the property ladder.
There are a number of different ones across the country and you should contact the house builder if you want more information about these in your local area. Most of the common deals available now include help with deposits, shared equity or part exchange schemes.
Also be aware that if a house builder if offering part exchange then it may have own some properties that it has bought off clients moving into their new builds homes. A construction company doesn’t really want these homes but it had to in order to sell the new ones they had built. They probably just want rid of them and can offer them at 10% -20% discounts.
Think Long term
If you have done the hard work and managed to secure a mortgage then think about the long-term picture. Will you be having kids soon and is there the added room for them? Are they good schools nearby?
If is also a good idea to think about whether the building can be improved over time. Is there room to expand the house and make alterations? It is in all likelihood that property prices will stagnate for a while or even drop if the interest rates increase so you can no longer just hold a property and see the value increase. You have to improve the value by improving the building itself.
Another point that is worth thinking about is the actual area itself. Try to find and area that has been growing steadily in price as this may mean that more affluent people are chosing this area over others. Being situated in an area before it becomes the fashionable place to live is a sure way to get an increase on your property.
The best first time buyer mortgage advice is to really to do your homework and go after a house you will love. Getting on the property ladder is definitely the way to go, and even if you dont get your dream house with your first purchase you can work towards improving with your next move. Don't be put off by all the negative press around the housing market at the moment. If your goal is to have a dream home them go for it.