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Important Advice For First Time Buyers
What is a First Time Buyer?
Anyone buying a home for the first time is classed as a First Time Buyer, as long the property is intended as their primary residence.
There’s no doubt that First Time Buyers notoriously have a more difficult time getting a mortgage than those already on the property ladder. Whilst the economy in recent years and Coronavirus haven’t helped this, armed with the right advice and some considered preparation, it’s perfectly achievable for First Time Buyers to find a competitive mortgage deal. Below are some top tips to point you in the right direction.
What is an Agreement in Principle and do I need one?
An agreement in principle is a conditional mortgage offer that you can obtain from a lender, prior to making your full application. It’s important to realise, however, that this is not a mortgage offer. If you decided to go ahead with the full application, the lender would require proof of income and circumstances. Equally, you could choose a different lender as you’re not bound by this.
It’s by no means a requirement for First Time Buyers, but can be beneficial. As well as providing you with a budget, it can instill confidence in sellers that you are a credible buyer.
How much can I borrow as a First Time Buyer?
All lenders calculate how much you can borrow based on affordability and credit score, so being a First Time Buyer shouldn’t make a difference to this.
Most lenders offer between three and five times your annual income, however, the exact multiple used will vary between lenders and based on your circumstances.
Speak To An Expert
Our fully qualified, experienced advisers have access to a wide range of products from across the entire mortgage market, including specialist mortgages for people with complex circumstances.
How do I improve my credit score and how does this help First Time Buyers?
When you buy a house, your credit score is an important consideration for lenders. It will help them decide both whether to lend to you and how much. Improving your credit score before you apply for a mortgage can help your chance of acceptance and access to competitive deals.
How to improve your credit score
- Check that your address is accurate on all accounts held
- Ensure you appear on the electoral roll
- If you have credit agreements, remain with 50% of your credit limits
- Repay all loans and bills promptly for at least a year prior to your application
- Credit builder credit cards can be used responsibly to build your score, where your low score is a result of never having credit
How much deposit do First Time Buyers need?
Whilst some lenders will ask for a higher deposit from First Time Buyers, this is not a rule and therefore a standard deposit of between 10% and 20% should be adequate.
What fees are involved with buying your first home?
Arrangement fees
Arrangement fees are charged by most lenders for the preparation of your mortgage. Costs vary between lenders.
Valuation fees
Whenever you buy a property, an independent valuation has to be taken out in order for the mortgage to be approved. Fees will depend on the firm and level of valuation you choose.
Legal fees
Legal fees will be due to your solicitor, who will arrange conveyancing and local authority searches on your new home.
Stamp duty
If you purchase a home above, you may need to pay stamp duty. There is currently a stamp duty holiday in the UK until 31st June 2021, however, which means you will only pay stamp duty on a property costing over £500,000 until then. From 1st of July the nil rate stamp duty will be £250,00 until 31st October 2021. Returning to standard stamp duty from 1st November 2021.
Speak To An Expert
Our fully qualified, experienced advisers have access to a wide range of products from across the entire mortgage market, including specialist mortgages for people with complex circumstances.
Is there any help available for First Time Buyers?
There are homeownership schemes available to help those who will struggle to save a large deposit or are on a lower income to get onto the property ladder. These are all available to First Time Buyers, but availability varies across the UK.
NewBuy
This scheme offers you a 95% mortgage at a reduced interest rate of about 75% of the market price.
Shared Ownership
This scheme allows you to buy a share of your property, which results in a much lower mortgage requirement. Both the deposit and monthly payments are therefore much more affordable, but rent is also payable on the remaining share of your home.
How can a Mortgage Broker help First Time Buyers?
Completing your first mortgage application can be a daunting process. At Heritage, our Mortgage Brokers can help ensure that you find a lender who offers competitive rates to First Time Buyers, as well as helping with the administrative side of things.
We have plenty of experience helping First Time Buyers and can guide you through the whole process step by step. Our goal is to save you time, money, and much of the stress that goes along with buying your first home.
I cannot express the quality of service received as a first time buyer from Luke at Heritage Mortgages. No query to big or small, with quick responses alongside an exemplary level of service, Luke secured a great result during the pandemic so I could purchase my beautiful new home. Great market knowledge surrounding self-employed earnings was clearly evident and secured the desired result. Thank you!
Annabelle is a top notch Mortgage broker. She took a year of silly questions, being stupid and setbacks from me and she stuck by me and got me my mortgage on my first home. She’s an excellent person who just thoroughly loves her job and wants to see people happy in their homes. Could not recommend anyone higher! Thank you Annabelle.
Highly recommend Annabelle, she is a fantastic broker, she sorted our remortgage in a flash! My hubby and I were concerned about the process due to him being self employed but Annabelle got us a DIP in no time at all, a mortgage offer within days and I’m happy to say we’ve just completed. We couldn’t be happier with the service we received, it was faultless – thank you! So if you are reading this and like us you are hesitant about speaking to a broker I’d say just do it, Annabelle took away all the stress and got us a great deal. 💕
Why Heritage Mortgages?
- Independent Tailored Advice
- Access to the Entire Lender Market
- Best deals based on your unique circumstances
- No Fees until your Mortgage Application is Approved
