Tips for first time buyers

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How much deposit do I need to buy my home?

Before looking to buy your first home, you will need to get together a deposit.

Generally, the size of deposit will be between 5% to 20% of the cost of the home you would like. For example, if you want to buy a home costing £150,000, you’ll need at least £7,500 (5%). It’s worth knowing that having more than 5% will typically gain access to a wider range of competitively-priced mortgages.

What other costs should I factor in to buying my first home

In addition to your mortgage, there are others costs to bear in mind when buying a home:

  • Survey costs
  • Solicitor’s fee
  • Removal costs
  • Buildings insurance
  • Initial furnishing and decorating costs
  • Mortgage arrangement and valuation fees; and
  • Stamp Duty

Note that first-time-buyers will pay no Stamp Duty on the first £300,000 for properties worth up to £500,000.

Will I be able to afford the monthly payments?

It’s wise to put together a budget before you start looking for a property. Lenders will check you can afford the mortgage and also ‘stress test’ your ability to make your payments if interest rates were to rise or if your circumstances changed, such as a planned retirement date or if you started a family.

As part of the mortgage application process, you’ll need to show the lender evidence of any outgoings you have and prove your income. Don’t worry we can support and advise you all the way with this.

Home-buyer schemes

Several government-backed schemes aim to give home buyers a helping hand onto the property ladder. If you can use one of these schemes, lenders will still want to ensure you can afford to pay your mortgage (see above).

Details of the Government’s help to buy schemes: https://www.helptobuy.gov.uk/

Finding a mortgage

That’s where we come in and can help (if you’d like us to). There are many different mortgage deals to pick from, so choosing the right one can be tricky. It can depend on several things, so it’s a good idea to do some research and talk to experts such as mortgage brokers. Brokers often have access to a wider choice of mortgages than is available to individuals searching directly.

The application process

A lender’s priority will be your ability to continue to make your repayments once they have started. Interest rate rises, or events affecting your financial circumstances are two considerations. Proving your income if:

You have an employer.

You’ll need to provide evidence of your income, and provide information of your outgoings, including:

  • Debts
  • Household bills, and
  • Other costs, such as clothing, childcare and travel.

To prove your income, you might have to produce payslips and bank statements.

You are self-employed

You could be asked for tax returns and business accounts prepared by an accountant going back two tax years.

Guarantors

If you’ve struggled to get a mortgage to buy your first home, you might want to consider a guarantor mortgage. This means a parent, guardian or close relative agrees to be responsible for paying the mortgage in the event you cannot.

Guarantor mortgages shouldn’t be entered into lightly. They’re legally binding arrangements. Your guarantor needs to be able to afford to pay your mortgage if you get into difficulty.

 

Ashton Taylor has a particular track record helping people find a suitable first mortgage and helping get their feet on the property ladder. Contact Tom Ashton or call 0330 043 0013.

 

The information in this blog article does not constitute professional advice and is general in nature. For example, it does not take into account any individual’s personal circumstances.

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