Buying your first house is one of the most important purchases you will ever make. With housing prices steadily rising year on year, this can make getting on the property ladder increasingly difficult for first-time buyers.
The Office for National Statistics (ONS) stated that, in 2015, the average price paid for property across the whole of England and Wales increased to 6x the average salary. In 122 areas of the UK, house prices have reached a staggering 10x greater than the local publics’ average income, making it near impossible for first-time buyers to jump on the property ladder.
However, do not fear the intimidating statistics of increasing house prices. There are a number of things first-time buyers can do to benefit their opportunity to become homeowners.
When qualifying for a mortgage, your credit score is arguably the most important factor. Lenders will use your credit history to assess your previous borrowing, and whether you are a reliable candidate for the mortgage.
You can obtain a copy of your credit report from a range of credit reference agencies such as Experian and CallCredit. If you haven’t borrowed before, one way to improve your credit rating is to take out a credit card and pay off the full balance each month. Even if you are only using it for small things like food etc, this proves to lenders that you aren’t a risk for them, ultimately by building reliability for yourself.
Being on the electoral register can also impact your credit rating, so if you aren’t already, you can get signed up at: www.gov.uk/register-to-vote.
It’s important to be aware of the vast range of costs that go into buying your first house, including deposit, surveys, lender booking fees, solicitor fees, lender arrangement fees, stamp duty etc.. Make sure you have enough saved before you begin the process, it will make the journey a lot smoother and prevent you from the stress of unexpected or unaccounted fees, as well as general living costs.
Following on from the previous tip about saving, taking a look at your budget can definitely help to save. Look your current income and outgoings and try to identify areas of spending that can possibly be reduced, like lunches, coffees, or other small costs. Although you may only be cutting a few pounds a day, it can make a noticeable difference over time.
That £3 coffee you buy everyday doesn’t seem like much but over the course of a year that’s around £780!
The costs associated with a mortgage can be unbearable to some. If you are unable to afford a mortgage on your own, you could consider buying with a friend or family member. If you were to choose this route it is vitally important that both stakeholders come to an agreement regarding what will happen should either tenant wish to sell at a later date.
You will also need to decide on how the property will be split, e.g. whether one tenant is paying a greater share of the deposit etc, in order to avoid any legal battles or disputes in the future.
There are 2 routes to take when buying with friends and family; joint tenants or tenants in common. Tenants in common allows for the property ownership to be divided however the tenants please and also allows for the tenants share of the property to be absorbed by a family member in the unfortunate instance of death. Alternatively, if you select to become joint tenants, your ownership of the property will be passed to the other tenant.
There are a vast range of mortgages to choose from, but it’s about choosing the one that suits your situation most accurately. Finding the right mortgage depends on a range of factors, so definitely do some research and enquire with mortgage brokers for expert advice.
Once you feel as though you’ve found the mortgage that’s right for you, make sure you are fully aware of the small print and do not fall into the trap of making multiple applications just to compare offers.
Each mortgage you apply for is recorded on your credit report that other lenders can see, negatively impacting your credit rating. Applying for a large number of mortgages within a short time period can be interpreted as fraud or that you are in desperation financially, resulting in a decline or altered offer.
Hopefully the above tips are helpful in securing that all important first mortgage, for more information in greater depth, or further advice and guidance, contact Legacy Financial Services to book a free initial appointment to discuss your mortgage requirements.
The Financial Conduct Authority does not regulate some forms of Buy To Let.
The Guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore targeted at consumers in the UK.
Principal: Darren Spragg
Legacy Financial Services is an Appointed Representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading name of Advance Mortgage Funding Limited which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.
Tel: 0800 043 9611