Despite concerns about the impact of Brexit and the recent pandemic, Britons are still pretty keen to buy properties for their very own. And the market has recently seen a lot of first-time buyers. The number of UK first-time buyers was at its highest in 11 years earlier this year, although that has dropped off a little during the last few months. But if you’re one of those first-time buyers who is new to the housing market, you might not know all the in’s and out’s and what options are available to you. So today, we wanted to share our 5 top mortgage tips for first-time buyers.
Work Out What You Want (And If You Can Afford It)
First things first – you need to know what you actually want. A lot of first-time buyers know that they want a house or a flat, a garden or not, but that’s about it. Past those basics, do you know exactly what it is you want from a home? And more importantly, can you afford it? When it comes to mortgages, that can be the deciding factor, so it’s important to be realistic about your deposit amount and your ongoing budget. A few things to bear in mind:
- Choose a mortgage type that suits you. Do you want to know exactly how much will go out each month, and know that it’s the same? Then a fixed rate mortgage might be best. If you want something that will match the Bank of England base rate, then a variable mortgage would be better.
- Factor in interest increases. In 2017 they went up for the first time in almost a decade, and they will probably go up again.
- Think of the future, as well as the now. A two-year fixed mortgage might seem like a great deal, but what happens at the end of that period and it reverts to a higher standard variable rate?
- Don’t forget the extra schemes. As a first-time buyer, there are schemes and plans available to help you onto the property ladder, so make sure you check your eligibility for things like the Help To Buy scheme.
Deposit Saving Has Never Been More Important
For modern first-time buyers, the deposit has never been more important. The more deposit you are able to put down on a property, the more likely you are to get a better deal on your mortgage, or to be accepted at all. This is particularly key when it comes to working out interest rates. While you may be able to get support from parents (which is becoming increasingly more common), putting aside a little bit every month will help hugely in building up that deposit.
Make Yourself Attractive To Mortgage Lenders
Before you even start to apply for a mortgage, you want to make yourself as attractive to lenders as possible. That’s not as difficult as it sounds – all lenders are looking for is proof that you’ll be able to keep up with the repayments and be a responsible borrower. You can demonstrate this by:
- Showing lenders you can manage credit accounts. Provide evidence that you can keep up to date with the payments on your credit cards, mobile phone contracts and utilities.
- Show them you can manage your regular finances. As well as managing credit, lenders will want to see that you can cope with regular fixed costs. Things like childcare, season tickets, fixed utilities and more.
- Cut back on unnecessary outgoings. Mortgage rules have got a lot tougher over recent years, which means lenders will be focussing more on affordability. This means they don’t just look at how much you earn, but how much you spend. So if you can go without the gym membership or the daily high-street coffee, now’s the time to give them up.
- Check your credit report. All lenders will check your credit report as a matter of due course, to look for red flags. So before you apply, make sure you check what your credit score looks like, and if there are any issues showing, work hard to remove them before you apply.
Get Your Documents Together
During your initial mortgage meeting you will be asked for a range of documents to prove your eligibility and affordability, and the process will go a whole lot quicker if you have them all ready in advance. Some lenders will have specific requirements, but you will generally need:
- 6 months of current account bank statements
- Your last 3 months of payslips and most recent P60
- If you’re self-employed, 2-3 years of accounts from a professional accountant, and tax form SA302
- Full details of the seller, your solicitor, estate agents and any other party involved.
Don’t Forget The Hidden Costs
The most common mistake first-time buyers make is thinking that the price of the house is the only cost involved. But in reality, there are a lot of other costs that will impact the amount you need to borrow. These include:
- Legal fees
- Surveyors fees
- Valuation fees
- Stamp duty
- Moving costs
At Northwood, we pride ourselves on supporting first-time buyers through the maze of information and to their perfect property. From helping you understand what you need to get your mortgage, independent mortgage advice and a wide range of fantastic properties to suit any budget, we are here to help the first-time buyer in your life find their first home. For more information, or to book a slot to come and chat to an expert, just get in touch with us today.
