First Time Buyers

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First Time Buyer's Frequently Asked Questions

Listen below as Richard Crow talks all about mortgages for First Time Buyers.

In less than 20minutes, you’ll know a lot more about getting your first mortgage sorted.

How is the mortgage process different for First Time Buyers?

The main difference is, of course, that this is the first time that you will be doing this. First Time Buyers can feel overwhelmed. They’ve got no idea where to start – so we’re here to hold their hand, look after them and advise them all the way through.

What is an Agreement in Principle?

An Agreement in Principle is essentially a statement from a lender that, based on the information you’ve given, they will lend you a certain amount.

Your Agreement in Principle is your ticket to look at properties and make a credible offer on a home that you want to buy.

How much can a First Time Buyer borrow? What sort of deposit is needed?

It all comes down to the total income coming in, your financial commitments and what’s on your credit files. The higher the income and the lower the commitments, the more you’ll be able to borrow.

A lot of people, depending on their credit file, can actually get a mortgage with just a 5% deposit.

How do I know what my credit score is and how do I improve it?

This is so important. People don’t actually understand the impact that a careless mistake can have in the future. Not being conscious of your credit file really can cost you hundreds of pounds per month.

We recommend that clients use Check My File as it covers Experian, Equifax and Transunion all in one report and you get a 30 day free trial. Once you know where you are with your credit we can give you tips on how to improve your score.

You might need to remove a past financial association – say if you’ve got an ex that wasn’t so good with their money for example. You may also need to contact lenders that have put incorrect information on your credit report – we see that more often than you might think.

You might need to contact lenders to repay defaults or CCJs. I also advise clients not to gamble or take out large finance such as buying a car just prior to an application – or increasing their credit card balances. I always advise people to keep credit card balances below 50% of their limit too.

It’s worth reading our Bad Credit mortgages pages for further help on this.

What is the First Time Buyer ISA? Are these still available?

No, you can’t take out a new First Time Buyer ISA any more. However, many people still have them. With the First Time Buyer ISA, for every £200 that you put in, the government gives you a £50 reward.

But this bonus cannot be included in your deposit. What happens is your solicitor will claim the bonus from the government and you will receive this after you have moved into your new property.

Speak To An Expert

What we really enjoy is being part of one of the most important purchases in people’s lives. It is incredibly special to witness the excitement and emotion when people receive their mortgage offer.

Whether it’s your first time, moving home, investing or just looking for a better rate we would love to hear from you. 

What schemes are available for First Time Buyers?

There are various options:

Help to Buy scheme. You will need a 5% deposit for a home. Once you find an appropriate  new-build home, you put your reservation fee down and apply for the scheme. If you are successful,  the government effectively gives you a 20% loan. It’s good if you’re on a career pathway where you know that in two to three years’ time your income will increase significantly so you can pay off the loan. Note that the loan is worth 20% of the property value, so it can increase in line with property prices.

Mortgage Guarantee Scheme. This came out during the pandemic as a way to make more mortgage lenders offer products with just 5% deposit.  If you’re unfortunate enough to not pay your mortgage back, the government guarantees your 5% and repay that back to the lender. This government initiative encouraged lenders to come back into the market after many providers withdrew their products.

Shared Ownership. This is good for people who can’t generate a huge deposit. They might be paying quite large amounts out in rent and want to get onto the property ladder. It’s a way to do that by buying a proportion of a property. You get a mortgage on the percentage that you own and pay rent alongside on the remainder of the property.

Joint Borrower Sole Proprietor.  Some lenders will allow you to include somebody on your mortgage and use their income for affordability, without being on the deeds of the property. Say you’re single and your parent fits the affordability criteria, the parent can then go on the mortgage. Your parent has no claim on the property, but can help you get on the property ladder and pay the mortgage.

What fees are involved when buying your first home?

The obvious one is stamp duty – but if you’re a First Time Buyer, you can buy a property up to a value of £300,000 without having to pay stamp duty. If you’re a home mover, duty kicks in from £125,000.

There may be an arrangement fee for the mortgage and there may be an evaluation fee as well. Your solicitor will charge you for search fees, There is also the cost of a survey if you want one.

You’re going to need buildings and contents insurance, life cover, and critical illness cover. Most important of the lot is of course your broker fee!

The good news is that this only applies when you buy your first home. When you remortgage in future you won’t face so many costs. There’s no stamp duty, we can usually get free valuations and your legals funded by the lender too. There are no searches, so the remortgage process is a lot cheaper – in fact it might save you money.

How can a broker help First Time Buyers?

We can look after you through the entire process, from your initial consultation to picking up your keys.

We start by assessing your affordability so you can set your property budget. We can give you a Decision in Principle prior to viewing any properties, so you’re in a strong position to buy. We issue you with your certificated deposit proof, solicitor details and your Decision in Principle all in one email so youre ready to make an offer.

We place you with your lender, we can link you up with solicitors, help you with your paperwork, liaise with estate agents and more. We chase everything up and will agree on a set day of the week to update you, so you’re not waiting around. We make it so easy for the client.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. 

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