Are you a first-time buyer? There are specific mortgages specially for you!!
Surprisingly, you may not have to be buying your first ever home to be classed as a First Time Buyer (FTB). Different lenders have slightly different rules on this but as a guide, if you haven’t owned a property in the last three years then you could be classed as an FTB for mortgage purposes.
So, perhaps you have been saving hard for a few years to get a deposit together, your next step will be to see how much you can borrow then you will have a good idea of the properties that you may be able to afford.
There are two benefits to having a larger deposit; obviously you can afford a more expensive property but another advantage is that the percentage that you need to borrow (known as Loan to Value% or LTV%) will be lower allowing you to access better (cheaper) mortgage products.
Before you start to view properties it’s a really good idea to get an “Agreement in Principle” (AIP) from a mortgage lender to get an idea of how much they are likely to lend. When we approach a lender on your behalf we will provide them with your income and expenditure figures so that they can assess your affordability, each lender has their own method of calculation, so part of our job is to find the best deal available based on your personal circumstances.
Having passed their affordability check your chosen lender will search your Credit History to ensure you are a good risk. This is why we may ask to see a recent copy of your credit report before we approach a lender (Credit Report Links). There are two types of searches soft or hard, this refers to the record or footprint that the search leaves on your credit file, a soft search leaves no record and has no effect on your credit score while a hard search can be seen by other searchers and can affect your credit score so we recommend only one or maximum two AIPs.
There are several ways to make it easier for yourself to buy your first property.
- Buy with your partner or friend on a Joint Mortgage
If the amount you can get on a mortgage plus your deposit isn’t enough to get you the property that you want, you may be able to buy a home with someone else – either a partner, friend or family member. They could add to your deposit and by combining incomes, you could take out a larger mortgage and get a property together.
A joint mortgage could mean that own equal parts of the property – joint tenants – or you might each own a share of the home – tenants in common – in this case the shares need not be equal for instance if one of you puts in a much larger deposit.
I would recommend that you each obtain legal advice before taking out a joint mortgage so you all agree on what happens to the property should one of you decide you want to sell or leave.
- Help to Buy
If you have a deposit of at least 5%, you may be able to use a government scheme called the “Help to Buy equity scheme.”
With a Help to Buy: Equity Loan the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. You won’t be charged interest on this loan for the first 5 years just a £1 per month fee. After 5 years you will be charged 1.75% and this increases each year.
You can find the Government Help to Buy site here: – Help to Buy
There is also a Help to Buy ISA available through a number of banks and building societies. This is designed for first-time buyers. Depending on how much you pay into your ISA, you could get a savings top up of between £400 and £3,000.
You can find the full guide to Help to Buy ISA here: – Help to Buy ISA