Top Tips for first time buyers

Homed:In Blog

Feb 9th 2021

Top Tips for first time buyers

By Gabriella Edwards

It is becoming increasingly difficult for first time buyers to get on the property ladder due to rising house prices and stricter borrowing restrictions. This explains why between 1995-1996 there was a decrease of 247,000 first time buyers. Therefore, it is no surprise that the number of 16-34 year olds renting has risen from 51% in 1996, to 73% in 2016. That’s why, HomedIn have consolidated our top tips to help you, as a first time buyer to get onto the property ladder.

1. Start saving money as soon as possible

According to a study conducted by ‘Zoopla’, the average first-time buyer properties cost around £220,000 in which the average deposit sits at 15% meaning that the deposit figure is £33,000. Therefore, in order to effectively save this amount of money it is important to start saving as soon as possible in order to achieve your goals quicker.

2. "Look after the pennies and the pounds will look after themselves”

It is important to keep track of your spending habits and adapt these if you are planning on buying your first home. This is because mortgage lenders take into consideration your spending patterns when assessing affordability. Therefore, cutting down on these spending habits will not only present you as more appealing to lenders but it also means that you will be saving more money which can be put towards your deposit.

3. Pay off any dept

It is important to pay off any dept that you currently have if you wish to get onto the property ladder. This is because mortgage lenders take into account how much you spend on unsecured dept repayments such as loans and credit cards in order to assess the type of mortgage payment you can afford.

4. Credit Score

A credit score is a numerical representation of the creditworthiness of an individual based on an analysis of a person's credit files. Therefore, this means that banks and building societies use this data in order to asses how likely you are to repay your depts therefore it is important to have a good credit score. In order to improve your credit score you can open a credit account or set up a direct debit e.g. pay a monthly mobile phone contract or a monthly subscription to a streaming service.

5. Work out a budget and speak to a mortgage advisor

It is important to calculate your budget by taking into account other costs associated with buying a property. Therefore, this will mean that you search for a property will be more realistic of what you can afford. In addition, you can be provided with a mortgage offer in principle which means that your finances are already in place consequently making you a more attractive buyer.

6. Consider buying a property with a partner or a friend

Another effective way to raise funds is to buy a property with someone else as this means that you will have a bigger deposit and will be eligible for a bigger mortgage.

Government Schemes:

1. New government scheme ‘Help to Buy: Equity Loan Scheme’ to help first time buyers.

The ‘Help to Buy: Equity Loan Scheme’ is a government loan of between 5% and 20% of the value of a new build property, or 40% if you’re buying a property in London. However, you are only eligible for this loan if the buyer pays a deposit of 5% and has a mortgage of 25% thereby, the equity loan, deposit and mortgage must cover the total cost of your new home.

2. Help to Buy: ISA

Although the ‘Help to Buy: ISA’ scheme closed to new accounts on the 30th November 2019, if you opened an account before this date you can continue saving into your account until November 2029. This government scheme will boost your savings by 25% for every £200 you save, you will receive a government bonus of £50. The maximum government bonus you can receive is £3000 meaning that you would have a saved amount of £12,000 as well as an addiional £3000 bonus.

3. Shared Ownership

Shared ownership is where you can buy a share of the property from the landlord and rent out the remaining share. For example, you could purchase 25% of the property and then you will rent the remaining 75% from the landlord. In addition, this is a beneficial method to use as you can choose to purchase another share at a later time up to 100% of the property.

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