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First time buyer

A First Time Buyers essential guide 

A first time buyer needs all the help they can get and this essential guide will provide you with the ideal starting point when it comes to buying your first home.

Cut your outgoings and improve the mortgage you are likely to receive

Stricter mortgage regulations mean that lenders will review your finances to a high degree before they offer you a mortgage. You want to have as much disposable income or money in reserve each month in order to give a lender confidence in your ability to pay the mortgage on time and in full.

It will be of benefit to go through your expenditure and remove as many items as you can. You should also look to reduce your debt if possible, as this will impact on the image mortgage lenders form of you while also improving your credit score.

Save more money as a deposit and improve the mortgage you are likely to receive

While improving your finances and reducing debt is sensible, you should also look to save as much money as you possibly can. The higher the deposit you can offer, the more likely you will be to receive a mortgage offer and the better the mortgage offer is likely to be.

A good deposit can significantly impact on the APR of the mortgage you are likely to be offered, so you should take steps to save as much money as you can.

Help is available in saving money for a deposit

When it comes to saving money for a deposit, be aware that assistance is available. The Help To Buy ISA the Government provide you with additional backing for your own savings and there is also the ‘Family Guarantee mortgage’ where a guarantor can assist you in getting a better deal. This is a big responsibility and it isn’t something to rush into but there are ways to get assistance in saving for a deposit or obtaining a better mortgage.

Know what you need in a home and know what you would like to have

You may have an ideal home in mind but when looking for property, it is best to be as flexible as possible. This will allow you to find the best home for your budget and requirements. This means you should know what you definitely need to have in a property and what would be nice. The things that are nice shouldn’t be deal-breakers and if you cannot find these aspects in a suitable or affordable home, you should accept this and focus on what you really need.

Know the difference between a freehold and a leasehold

If you buy a freehold property, you are the outright owner. If you buy a leasehold property, commonly a flat, you are buying a right to remain in that property for a set period of time. The length of the lease that is left will impact on how good a deal a property is. You should be looking for a lease of at least 100 years and some lenders will not provide a mortgage for a property with 70 years left on a lease.

The right survey can make a big difference in the long term

There is a range of surveys to choose from when having a property evaluated but the majority of them aren’t of value or benefit to a buyer. A HomeBuyers report is the most common survey and that is suitable if you are buying a relatively new home in obvious good condition. If you are buying an older property or a more unique property, it makes sense to arrange for a more detailed survey to take place. A rics Building Survey is the most in-depth option and this will provide you with peace of mind about your new home.

Be aware that interest rates can rise

When thinking about a mortgage, the attraction of a variable rate mortgage and the hope that interest rates will fall is naturally attractive. However, interest rates can rise and you need to be sure that you can afford to pay a mortgage that is rising month on month. The fixed rate mortgage is likely to be the best option if you are not confident in your abilities to pay more money each month.

You have monthly bills other than your rent to consider

Don’t just think that your monthly mortgage payment is the only bill to consider, there are lots of bills to pay each month. Council tax, utility bills, broadband, travel, entertainment, food and other bills all have to be taken care of too so you need to be realistic and honest about what you can afford to spend each month.

There are often many fees involved with buying property and moving into a home

There are also bills and fees to pay when you buy property such as solicitor fees, stamp duty and removal costs. This can place great pressure on someone who has just bought a property so don’t stretch yourself to your financial limit when buying a home.

Purchasing property for the first time is an exciting opportunity but it can be expensive and daunting. This is why you need to make sure that you are fully informed of what you need to know when buying your first home.