7 Tips For First Time Buyers
Buying your first home can be both an exciting and daunting prospect. However, thoroughly planning your finances to the finest detail will help to keep you on track. As with an first time buyer, it’s easy to get excited and caught up in the whirlwind of buying your first home, without even considering the full financial impact.
However, being to pessimistic over the whole situation could put you off the whole situation and this isn’t something that should ever happen. No matter how complicated buying your first home might seem, it’s important to stick with it because it will be worth it in the long run. Knowing what you can afford and how confident you are at talking to an estate agent, will help you to achieve the property of your dreams.
1. Save and Save Some More
Most mortgages are typically 95%, and many buyers will typically have at least a 5% deposit. However, the bigger the deposit you have, the lower your interest rates and the more affordable your monthly repayments will be. It’s not just the deposit you need to save for though, you also need to consider other financial aspects such as legal fees and stamp duty. When saving money make sure it’s in a savings account or isa that offers the best interest rate. If you’re worried about dipping into your savings, then consider a fixed rate bond which typically won’t let you make withdrawals until a certain day.
2. Your Budget
You should analyse your income and outgoings to identify any areas, where you can cut spending. Cutting back on small things like buying a daily coffee can make a huge difference over time. Switching to cheaper gas and electric or insurance can help you to also make savings. You should always be able to afford your usual monthly outgoings, your mortgage plus have money left over.
3. Financial Health Check
Just like any type of finance, a good credit history is important. There a are a number of free and paid for credit check services such as Clear Score, Noddle and Experian. A credit report will tell you how much money you owe and how many credit agreements you currently have in place. If you notice any errors you can ask for them to be corrected, but you will need to provide proof.
4. Register To Vote
If you aren’t already on the electoral roll at your current address, then you need to register for it as soon as possible. Any lender will check to see if your on the electoral roll and this can be a deciding factor as to whether or not to lend you money. Checking your credit report as noted above will tell you whether your on the electoral roll and will let you know of any personal finance history that might be affecting your ability to borrow money.
5. Know The Mortgage Market
Don’t just look at one or two mortgage lenders, look at all different types of providers. This will help you to understand the different offers around which will ultimately help you get the best deal. Many lenders also offer no arrangement fees or a set number of years with a lower rate. It’s always best to check if the Bank of England is likely to lower or raise the current rate.
6. Be Creative
Getting on the property ladder isn’t easy, so if you’re thinking about becoming a homeowner then you need to get creative. More and more people are opting to buy properties with friends or family, and even shared equity schemes. There are a number of government schemes that also help people such as teachers and nurses to get on the property ladder. You might also want to consider help to buy schemes that are focussed on new build homes. By doing this you only only need to get a 75% mortgage from the bank.
7. Take Caution When Applying
When you are ready to apply for a mortgage, it’s important to read the small print. Also avoid making multiple applications just to see what type of offer or deal you might get. Just like any type of credit, applying for a mortgage will leave a mark on your credit file. The more applications you submit, the more harm you could be doing to your credit rating. Applying for multiple mortgages can make you look desperate or make it look like your trying to commit fraud. If you then get a bad credit rating, it will become even more difficult to get a mortgage as a first time buyer.