Revealed: Seven top tips for first-time buyers
Buying your first home is expensive and it can be complicated.
If you’re a first-time buyer, you want to make sure you tick all the boxes to secure the right mortgage and be in a strong position to purchase your property.
That’s why Adrian Anderson, director at property finance specialist, Anderson Harris, has collated the seven best tips from his team of specialists to hep first-time buyers onto the property ladder.
Here’s what they had to say:
1. Understand your borrowing and buying power
Speaking to an independent mortgage broker before you start your search will help you establish your mortgage capacity and budget. This is very important at the moment with rising costs and interest rates.
People are paid differently these days with different employment modes – for example, self-employed, contract work, variable income etc. Lenders have different criteria for these. They are also updating their affordability calculators to reflect the higher cost of living.
Having a current and clear view of your mortgage capacity will therefore be important when you start viewing properties.
2. Improve your credit score
First-time buyers can fall at the first hurdle in securing a mortgage, because they may not have a good credit score. Factors behind this can include:
• You’ve lived at multiple addresses in a relatively short period of time.
• You don’t have any credit history (for example they haven’t any credit cards).
• You may not be on the electoral roll or have utility bills in your name.
It’s important for any first-time buyer to carry out a www.experian.co.uk or www.equifax.co.uk credit check. These are the two main credit reference agencies and so it’s worth checking there are no negative factors impacting on your score.
Be aware that lenders will look at your outgoings as well as your income. If you have too many outgoings or credit commitments, this may limit your mortgage capacity. With credit cards or other loans you have in place, it is important that the credit reference agencies can see that you are up to date with payments.
3. Impress estate agents
You need to present yourself as a strong applicant to estate agents. It is likely that they will request a mortgage ‘decision or agreement in principle’ for first-time buyers. This is something a mortgage broker can advise on. Also, don’t forget, that the estate agent is representing the seller not you (the buyer).
4. Draw on family support
If appropriate, speak to family members about a potential gifted deposit to help you achieve the purchase price you seek, or access a cheaper mortgage rate.
If you are buying with friends or siblings, do make sure you put an agreement in place with your solicitor. This needs to log who contributed what sums of money and what percentage will be allocated to each when you sell. It’s very important to do this at the outset to protect yourself later. It should not cost much time or money to put in place and is certainly an investment well spent.
5. Think long-term
When considering a mortgage and a property, it helps to think carefully about how long you may own the property or live in it. Long-term fixed rates are currently very attractive and can help with budgeting. They also provide peace of mind against interest rates increasing.
The downside of them though is that they will include early repayment penalties. These will kick in if you choose to move on quickly by repaying the mortgage during the fixed rate period. When looking at a property, think carefully about the area it’s in, your circumstances, and your plans. Do not commit to a long-term fixed rate if you think you’ll outgrow the property in several years.
Also think about the re-saleability of the property. This will be your home and a major asset for you. If you see yourself moving at some point in the future, be realistic about the desirability of the property to others. What might you need to do to improve this, and how can you budget for this further down the line?
6. Choose professional services wisely
Buying your first home is expensive however it doesn’t pay to cut corners. A sensible investment is to instruct a good solicitor.
Also don’t just rely on the bank mortgage valuation (survey) of the property. This doesn’t always give you the full picture of the property’s condition and your potential liabilities going forward.
Commission your own survey so you’re fully aware of what you’re buying. To find good professional contacts, reach out to friends or other people you know who may have purchased recently and ask for recommendations.
Make sure they’re members of the key professional bodies – for example, The Solicitors Regulation Authority and the Royal Institute of Chartered Surveyors.
7. Take advantage of government schemes
There are several Government schemes to help first-time buyers onto the ladder depending on your eligibility. These include Help to Buy, shared ownership, First Homes, and the Lifetime ISA to save for a first home.