Buying a property can often be a stressful experience – and that’s for the seasoned homeowner. What about first time buyers who are about to make their first foray into property ownership?
Without experience of buying a property, it’s hard to know what to do (and, importantly, what not to do). As a Guildford mortgage broker with over 20 years’ experience of helping first time buyers get on the property ladder, we’ve seen first time buyers make the same mistakes time and time again.
So, to help those applying for a first time buyer mortgage, here are the five most common first time buyer mortgage mistakes (and how to avoid them).
1. The 20% myth
First up is the common belief that you need a 20% deposit to get a first time buyer mortgage in the UK. Of course, the more you have the better as the larger the deposit, the better the interest rate and the smaller the monthly repayments. But 20% is not the prerequisite. In fact, these days, amongst a raft of government-backed programmes to help young people buy a home and lenders competing for business, you can get a mortgage with 0% deposit.
Complete Mortgages’ tip: Regardless of how much you have saved, it’s always worth meeting with a mortgage broker. You may be pleasantly surprised by what you could actually achieve with what you’ve already saved – even if it doesn’t equate to 20%.
2. The (not so) hidden costs
The horrible reality when buying a house is that there’s the cost of the property – plus extras. And generally speaking, the extras – Stamp Duty Land Tax (SDLT), conveyancing and surveys – amount to quite a lot in the UK. When you’re working hard to save for a deposit for a property, it’s easy to forget about these costs – particularly if this is your first property. At best, you might need to beg, steal and borrow in order to buy the property you want if you haven’t factored these costs in. At worst, it could be the undoing of the sale.
Complete Mortgages’ tip: Work out your entire budget for every component of the transaction. Just keep mind the big ones including SDLT, legal costs, surveys and removals. Our team of Guildford mortgage advisers also recommend adding a £5,000 buffer so that you have some rainy-day money to cover surprise costs (such as repairs to the property).
3. Don’t fall in love too soon
It’s very easy to fall in love when you’re young. It’s also very easy to fall in love with your first would-be property. However, falling in love with a property before you know how much you can borrow is likely to lead to heartache. Before you start looking for the one, speak to a mortgage broker to fully establish how much you can afford to borrow and the full cost of the purchase.
Complete Mortgages’ tip: Get a decision in principle before going property shopping. It’ll save you wasting time (and possibly tears) in finding a property that is too far out of reach. Knowing what you have to work with will also fill you with confidence when property hunting.
4. Credit scores count
Buying a property doesn’t just come down to how much deposit you have and how much you can borrow as a multiple of salary. There are a multitude of factors that influence a lender’s decision to lend – one of which is your credit rating. Many people often regard credit reports as abstract; however, your credit report is yours to view. It’s also yours to fix, should there be an issue with it.
Complete Mortgages’ tip: Even before you decide to arrange to see one of our Surrey mortgage brokers, we recommend that you take a look at your credit report (companies like Equifax and Experian are widely used – our favourite is Checkmyfile). We can go through the report with you, and if there are any issues that need fixing, we can help you fix them.
5. Get with the programme
The government is keen to get young people into home ownership. So, in order to help make this happen, it’s supporting a number of first time buyer programmes including the First Homes Scheme, Mortgage Guarantee Scheme and Lifetime ISA. Our team of mortgage brokers in Guildford are continually surprised by the number of first time buyers who aren’t aware of the resources available to them, which is the equivalent of giving away free money.
Complete Mortgages’ tip: As a Guildford mortgage adviser, it’s our job to make you aware of the programmes available to you at the point of the mortgage consultation. However, knowing what’s available in advance will help you get a better understanding of your actual financial position and expedite the mortgage application process.
Ready to get your feet on the property ladder?
If you’re a first time buyer who’s ready to buy their first property, contact our team of Surrey mortgage brokers on 01483 238280 or by e-mailing info@complete-mortgages.co.uk to arrange an initial consultation.
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