FIRST TIME BUYERS GUIDE

Before you set your heart on a property it is worth getting your ‘ducks in a row’. The steps below with help you do just that and increase your chances of being approved.

1. Credit Report – First things first, check your credit report.  A lenders will assess the information on your credit report as part of deciding if they will give you a mortgage or not.  Its essential that the information on there is accurate! Things like making sure you are on the electoral roll will improve your credit score and increase your chances of getting the mortgage you want 

2. Deposit  – You will need to save a deposit. As we have seen, it is possible to secure a mortgage with a deposit as low as 5%, but the more you can save, the less you are borrowing and, ultimately, the less you are having to pay back. In theory, the bigger the deposit, the less risk you are to the lender.

3. Paperwork – Typically a lender will ask to see last 3 months payslips, latest p60, I.D and Bank Statements. Making sure you have these documents to hand and ‘ready to go’ is essential. 

Presentation is key and Its really important that your bank statements are in good order. Lenders assess your conduct and so having missed direct debits and bank charges will decrease your chances of acceptance. Lenders will also be looking at your level of income and your outgoings. You need to show that if you are granted a mortgage that you can, comfortably, maintain the payments.

so In summaryStop all the unnecessary spending and make sure everything is squeaky clean in preparation for your application.

4. Decision /Agreement in Principle – Its imperative that you obtain an AIP before you start house hunting. This will give you the confidence that a lender will entertain your application. Many estate agents insist you have an AIP before you can even view a property let alone put in an offer on a house. 

An AIP involves the lender doing a credit search, assessing your circumstances on paper and then letting you know that as long as all the details match what you’ve told them, can provide the necessary documents (point 3 above) then they will be happy to lend to you. You will get a certificate which normally last 30 days and then you can continue with on the property journey with the peace of mind that your mortgage is in place (in principle)  and  

Don’t underestimate the importance of finding the right mortgage broker that understands your situation and goals!  At mainly mortgages we can quickly assess your circumstances and guide you through whats needed to get you approved. 

There are often Government-backed schemes that set out to make it easier for you to purchase your first home. Three of the latest of these are:

The First Homes Scheme

This scheme sees buyers being able to get a 30% discount on a new build property. This is only open to first-time buyers and preference is given to key workers and army veterans.

5% deposit

This sees many lenders offering a mortgage where the buyer has only managed to save a 5% deposit. This is possible as the Government underwrites the loan. This is a great tool for first-time buyers who often find that deposit requirements are a hurdle that is impossible to overcome.

Help to Buy

Help to Buy is a scheme exclusively for first time buyers. It enables you to get on the property ladder with just a 5% deposit whilst the government gives you an equity loan to put towards the cost of a new-build home. 

For the first five years, this loan is interest-free. From year six onwards, you will be charged interest at the rate of 1.75% however you can repay the loan at any time. The amount of equity loan you pay back will be worked out as a percentage of what your home is worth at the time. If the price of your home has gone up, then so will the loan amount you’ll need to pay. If the value has gone down, the amount you’ll need to pay on the loan will too.

Share Ownership (part buy part rent)

Shared Ownership gives buyers the opportunity to get onto the housing ladder without having to buy the whole house. You buy part of a property and rent the rest. You take out a mortgage on the bit you’re buying, then pay rent on the bit you don’t own.

Shared Ownership mortgages help people who can’t afford 100% of the cost of a home to purchase a share of a property and rent the rest. It’s a good option if you’re struggling to save for a deposit or have a lower income which generally stops you from buying a more expensive property. With shared ownership, you’ll only have to put a deposit of 5-10% of the share you’re buying. Sometimes don’t have to put any deposit at all.