Tips for First Time Buyers – A Guide to Buying your First Home

Jul 26, 2022 | First Time Buyer, Mortgages

Buying your first home is an exciting milestone - a memorable moment that will make many feel accomplished and joyous. As well as the opportunity to express your financial success, there is nothing quite like the gift of a new home to call your very own.

However, despite the excitement, whether you are searching for the perfect family residence or planning a fresh start in a home away from home, getting a mortgage may feel daunting for those who are unfamiliar with the process.

First-time home ownership is a valuable asset. But as house prices rise, new buyers wonder if they will ever be financially independent. In this article, we will establish some helpful tips for first-time buyers that can help secure your place on the property ladder and give you the confidence you need to make the best decision for you.

Buying your first home

 

There are numerous steps to take when purchasing a property. As a first-time buyer, you will often have the additional benefit of avoiding the sale of a previous home, which can sometimes leave you to deal with an often stressful chain of communications. 

With potentially a more straightforward course of action, there is a precious opportunity to refine your idea of budget, any plans for the future and what your dream home actually consists of. Some first-time buyers have the opportunity to find their dream home and work out the deposit later, and others might require a detailed plan set in stone from the get-go. Here are some of the essential considerations:

Set your budget and clarify a deposit 

 

Arguably the most critical question for first-time buyers is: can you afford a mortgage? The health of your finances plays a crucial part in your success. You need to search the market to find out what is currently available, how much you can afford to spend, and what percentage of the deposit you would require. 

Could you still afford the mortgage if interest rates were to rise? Risking future affordability is not something you want to chance. Lenders will let you borrow the money based on your income, and you could borrow over four times a single or couple’s salary. They will also compare income with regular monthly outgoings to decipher how much money you have spare each month.

This factors in credit cards, loan payments, and more, and if your finances are pushing limits, mortgage lenders will assess you on a 'higher stress test' typically at 7-8% depending on the lender, to ensure you can afford to repay. First-time buyers will need a minimum deposit of 10% to choose from a good selection of mortgages. To get the best mortgage interest rate, you should aim to provide an amount worth more than 20% of the house value or 40% if you are looking to get an impressive market offering. 

Essentially, the bigger the deposit, the better the interest rate, but a trusted mortgage provider can help support you with securing a rate that best suits your needs.

How healthy is your credit score?

 

One of the most crucial tips for first-time buyers is having a healthy credit score. First-time buyers with previous renting experience will understand the importance of credit checks and why looking after your credit score is essential when purchasing a property.

A mortgage broker can help you by looking through your credit reports and scores to determine the best or worst-case scenario. A higher credit score is more beneficial to first-time buyers as it expresses that you are more than trustworthy to borrow such a substantial loan, and depending on the lender, those with good credit are more likely to be considered for a 5% deposit. 

However, it is important to recognise that those with lower credit scores still have a valuable opportunity to apply and get approved for a mortgage application - it will just be a process that could be more costly in the long run without the right expertise to guide you.

To improve your credit score, you should focus on paying bills on time, limiting credit card applications, and only borrowing money you can afford to pay back. An impressive credit score will get you the quickest results, and you can use any free credit agency to find out what yours is, such as Experian, Equifax, Clearscore, or TransUnion. 

Debt Consolidation

 

If you or the person you are buying a mortgage with has outstanding balances on numerous credit or debit cards, you should think about consolidating all debts into one before starting the process. Lenders, brokers, and banks will all need substantial evidence to prove you are eligible for a loan. 

Debt will likely hinder your chances of a respectable mortgage when juggling mortgage and debt payments. Consolidating your debt is an option if you are paying off a considerable amount, and one debt is far more favourable to a lender than numerous costly fees across different accounts.

Mortgage broker solutions

The right mortgage broker can change everything, and nothing will be too much trouble when you receive a bespoke, tailored service.

At Lisa Parmley Mortgage Management, we believe offering mortgage and protection services is more than just guidance. We offer something different to the world of financial advice by pinpointing client requirements and eliminating the worry you often experience with financial advice. 

As a first-time buyer, initial worries and concerns you might have can overwhelm you, leaving no time to enjoy the rewarding journey you are about to go on. We will work closely with you to find the solution that best suits your needs and desires. Get in touch with us today to learn more about our tips for first-time buyers.

Your home may be repossessed if you do not keep up repayments on your mortgage.