At Steel and Co Financial, we understand the excitement – and the fear – of being a First Time Buyer. As new starters in the world of property ownership and finance, you may not be completely aware of the key points to consider. That's why we've put together these eight tips for First Time Buyers in the UK.
It's essential to seek out expert financial advice through a professional financial mortgage adviser, but here are some additional things to bear in mind as you take your first steps on the property ladder.
Tip one: Understanding Financial Commitments
Make sure you have a thorough understanding of the financial commitments you will face. This means considering the mortgage payments you can afford to make, as well as all the other costs associated with buying a property, such as solicitors' fees and stamp duty.
It is also important to ensure that you are aware of any potential hidden costs associated with buying a property, such as any repair or maintenance work that may be required. It is worth researching the local market and speaking to estate agents, to ensure you have a full understanding of the costs you may face. By taking time to plan and budget in advance, you can help to ensure that you are making a responsible purchase.
Tip two: Have a clear idea of the kind of property you want
Having a clear idea of the kind of property you want to buy and the area you'd like to live in is important. Take your time and don't rush into making a decision. It is important to research the market and find out the current prices for the type of property you are looking for. Work out a budget that you can realistically afford and make sure you leave room for unexpected costs.
Also, consider the future potential of the area you are looking at. Do some research into the local job market, schools, transportation options, and other factors that could affect the value of the property. By doing your homework, you can make sure that the property you purchase is a sound financial investment.
Tip three: Know your credit score
Having a good credit score is essential for first-time buyers, so being aware of what your credit report looks like before a lender checks it is essential. Fortunately, there are a few providers offering this service, such as Experian, Equifax, and Credit Karma.
Banks may also provide this as part of your current account. By checking your report, you can identify how to raise your score. This can include simple actions like registering on the electoral roll or cancelling unused credit cards and accounts. We have some great advice to help you get financially fit before applying for a mortgage.
Tip four: Attempt to reduce your debt as much as possible.
When it comes to your mortgage application and credit report, your lender will be able to get a glimpse of your current financial status. Any outstanding balances on credit cards or hire purchase agreements which you may have will be visible to them. This will have an effect on the amount of money you have available each month to make your mortgage payments - the less debts and outgoings you have, the higher the amount you will be able to borrow.
For first time buyers, it is beneficial to have a track record of managing and repaying some form of finance or credit agreement. This will demonstrate that you are able to make payments on time and manage debt well.
Tip five: Save for a larger deposit
It may not be a shock to learn that the more money you have for a down payment on a new home, the lower the instalments become. With a bigger deposit, you'll have the widest selection of loan products. Though it may appear to be a challenge to accumulate funds for a bigger deposit, the savings you'll make in the long term will make it all worthwhile.
Some lenders also accept deposits provided by relatives, and lately 100% loan-to-value products returned to the market. So, you have the option to choose from various loan products and even get help from family members. But, in the end, the savings you'll make from a larger deposit will be well worth the effort.
Tip six: Know your financial situation
Before you get your hopes up and begin the process of applying for a mortgage, it is essential to take the time to evaluate your financial situation. Consider the long-term commitment of a mortgage and make sure you can handle the monthly payments. Calculate your income and expenses, and then assess how much you can spend on a mortgage while still covering your daily living costs. Lenders will also review this information when assessing your application.
It is important to feel comfortable with your financial situation before moving forward with a mortgage. Ensure that your budget is balanced and that you have enough money to cover the mortgage payments. Be sure to factor in your day to day expenses as well.
Tip seven: Keep your documentation
Lenders always need evidence of income. Make sure you keep your payslips and P60 documents safe. These will be requested to make sure the loan is within your means. Along with these, you'll also need to provide at least three months of bank statements. This will help verify your income and expenses.
Tip eight: Speak to an advisor
At Steel and Co Financial, we have years of experience in mortgages and helping clients find the right deals for their unique circumstances. Whether you are a First Time Buyer, a remortgage client, or someone looking for specialist finance, our team of knowledgeable and dedicated advisers are here to help you. We have access to many lenders and products that are not available on the high street, so don't hesitate to reach out to us.
Are you a first-time buyer looking for helpful tips? Or, do you want to know how a mortgage broker can help you? We can make your dream of owning your own home a reality. Get in touch with us to find out how.
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured against it. We charge a broker fee for advice. The amount of the fee will depend upon your circumstances.
Steel & Co Financial Services is a trading style of Steel & Co (East Anglia) Financial Services Ltd, an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales no: 10146851. Registered address: 61 Alexandra Road, Lowestoft, Suffolk NR32 1PL.