Have you found yourself perusing the property pages, checking out estate agent listings or even just thinking seriously for the first time about buying a home of your own? We've used our experience helping people take their first steps on the property ladder to compile our top tips for first-time buyers.
Tip 1: Research your Buying Options
There are many positive aspects to home-ownership; however, it's no big secret that buying a house is likely to be one of the most significant financial commitments you'll ever make. That said, for most the cost of mortgage repayments is less than private rents, and the security and peace of mind that comes with owning your own home makes buying your own home a real draw. Your money will also be invested long-term rather than being paid to a landlord.
You'll most likely have an outline budget in mind; in most cases, this is based on how much you earn and what savings or investments you have. There are lots of mortgage products and buying options available, such as the Government's Help to Buy scheme or Part Ownership schemes. You'll need to consider the options available, and your eligibility for them, when deciding which mortgage type best suits you. This stage is a great time to speak to a mortgage advisor and get some expert industry advice. Remember mortgage advisors are there to advise not teach, so do your homework and go into the meeting with a broad understanding of the different types of mortgage products that are available, as well as what is an affordable repayment amount for you. This is also a great time to do some work boosting your credit score to maximise the lending options available to you.
Tip 2: Explore the Property Market
So you know what your mortgage options are, now it's time to ask yourself what property type you're looking for. Get out and explore the market and consider questions like, where would I like to live - town, city or village? Is this a property for the long-term, or will I be moving again in a few years? Which features are must-haves, and which are nice-to-haves? How far is the local school, hospital, shop? You may decide that you'd rather increase your mortgage amount and borrow over a longer period or utilise schemes such as Help to Buy to increase your spending power. Talking of how much you have to spend, here's our next tip:
Tip 3: Save a Deposit - Start Saving Early!
Most mortgages usually require you to contribute a 10% deposit of the cost of your home, so if you're looking at a property which costs £265,000, in most scenarios, you'll need at least £26,500 in the bank to buy it. Plus there are other costs to factor in such as surveys, solicitors fees, mortgage arrangement and valuations, buildings insurance, Stamp Duty (first-time-buyers are exempt for the first £300K for properties worth up to £500K) plus the costs of moving, decorating and running your new home. Plan for these extras on a case by case basis, remember the cost of running a new energy-efficient home can be significantly less than an older building.
The Government's Help to Buy Equity Loan scheme is designed to provide a route into home-ownership for first-time and 'next-time' buyers wishing to purchase. The scheme enables you to buy a new home with a 5% deposit, the government contributes 20% as a loan which is interest-free for the first five years, and the remaining 75% is raised as a mortgage. So for that same £265,000 new home, you'll contribute a £13,250 deposit, and receive a £53,000 loan with a £198,750 mortgage. There are also shared ownership buying options available such as Home Reach, provided by Heylo where you buy up to a 75% share of your new home. You then pay a monthly rent of 2.75% of the remaining value of your home, with the option to purchase extra shares until you own your property outright.
Tip 4: Your Next Steps...
You've got your checklist in place, you know where you want to live, which home you want and which mortgages and buying options you're eligible for. So what are your next steps? If you're planning to go ahead with a Help to Buy Equity Loan, you'll need to contact the developer and complete both a reservation and a property information form. Once this is completed, you submit these to the Help to Buy reservations team for assessment. If successful, you'll receive an Authority to Proceed document, and this is the point to go ahead with your mortgage application.
Whatever your home-ownership ambitions may be, at Autograph Homes, we have a dedicated team who can help and guide you with expert advice along every step of the way. Take a look at the new homes we have to offer or get in contact today to take your first steps towards owning your first home.