Smart Advice for First Time Buyers
First time buyers could be forgiven for feeling despondent about their chances of buying their own home.
Property prices, despite COVID, have risen; anyone renting will likely have seen their rent increase, leaving them less money to save; most mortgages require a 10% deposit – and with the average house price now in excess of £229,000, that’s no small ask. Plus, various other costs need to be factored in – stamp duty, solicitor’s fees, and surveys, as well as potential moving and furnishing costs. So, here’s some helpful tips to help first time buyers break their way into the property market.
Plan and save
Work out how much you can afford to spend on a property and then estimate the required deposit (usually 10%).
Determine how much you can save each month by reviewing your finances and working out what you could realistically cut back on, especially if buying a home is your priority. A £3 latte might not seem a big deal when you buy it - but if you buy one every day that’s a whopping £1095 you could save a year!
You can then set up a direct debit into a savings account, straight after you’ve been paid, so you get used to spending only what you have left. And you’ll be able to estimate how long it’s going to take to save for your deposit, as well as fees and moving costs.
There is various assistance available, and it’s worth asking a local estate agent for advice if you’re unsure what you’re entitled to. The Government’s Help to Buy scheme offers a loan of 5% - 20% of the value of a new build property, on which you pay no interest for the first 5 years. The Government have also set up two types of Lifetime ISA’s for homebuyers which offer a 25% bonus when you pay up to £4,000 a year. However, there are various restrictions and factors that need to be taken into account with all of these schemes so it’s worth seeking advice to make sure these are relevant for you.
Get mortgage ready
It’s important to have a good credit score when applying for a mortgage, so while you’re saving, try and pay all your bills on time, and see if you can pay off any outstanding loans. Having a credit card is also a good way of improving your credit score as it shows you are financially reliable.
It is possible to purchase a property without a deposit, but you will need help from family who will need to act as guarantors. You will need to enlist the help of a mortgage expert to find the right mortgage for you.
If you would like advice on securing the best mortgage deal, please do not hesitate to call Louise Lewis, smarthomes’ mortgage consultant, on 0121 744 4144 (option 2).
To find out more about smarthomes’ mortgage service: