Struggling to get a foot on (or
up) the property ladder? Here's our round-up of Government schemes that could
provide just the boost you need
Buying your first home this Spring? Give yourself the best chance with
these top tips.
1. Be sure you can afford it
Avoid setting yourself up for a disappointment by
getting your sums straight first. You’ll need a deposit of at least 5% of the
property price – but the more you can put down the lower rate you’ll get on
your mortgage.
You’ll also need to raise enough money to cover
your legal (solicitor) fees, stamp duty, surveys and moving costs.
Most important of all is whether you’ll be able to
get a mortgage. This will depend on a combination of your deposit, salary (or
combined salaries if you’re buying with someone else), outstanding debts and
credit score.
2. Consider Government schemes
Sums not quite stacking up? The Government offers a
whole host of schemes to help first-time buyers ranging from Starter Homes and
Lifetime ISAs, to Help to Buy and shared ownership.
3. Secure a mortgage agreement in
principal
One you’ve been offered a loan from a bank or
building society, get an agreement in principal. This document is free and
demonstrates to sellers and estate agents you are a serious contender.
4. Do your homework
Now your budget is established, you can search for
homes you can know you can afford. But preparation is key and, as ever,
start with location. This is the most important factor as it's the one that can't
be changed.
In terms of the property itself, think very
carefully about your requirements and narrow them down to must-haves and
nice-to-haves. List these down, remain focused on them and your search will be
a whole lot easier.
5. Be clever in your online
searches
Now get online and start your property search. In
addition to the basic price, property type and number of bedrooms, you can
refine your search using keywords – outhouse or parking for
example. Use tools available such as map search and travel times to specific
locations.
6. Get local estate agents on
side
It’s not all about online. Estate agents are the
gatekeepers to early information on properties, so meet as many as you can
face-to-face by dropping into local offices. Building a rapport could mean
you hear of crucial developments before other potential buyers.
Communicate clear ideas of what you are looking for
and stress you are a first-time buyer with a mortgage agreed and can be
flexible on move dates.
7. Be shrewd on viewings
Take your own photographs and use a compass to find
out what direction the property or garden faces – south facing is most popular.
Take stock of the natural light levels versus the
time of day, check for cracks in walls and keep a keen nose for the smell of
damp.
Outside the property, look for leaks or bad
guttering. Note how busy the road is, what the parking’s like and the condition
of neighbouring homes.
Ask direct questions on viewing, such as if there
have been any major works or extensions to the property? The agent is obliged
to answer them truthfully – and make notes. If you’re conducting several
viewings, it’s easy to get mixed up.
8. Cross reference nearby sold
prices
Once you’ve found a property you want to make an
offer on check the asking price against that of other homes that have recently
sold in the local area. Just punch in the address on
And, while it can help to calculate a cost in
'£s per sq-ft' of property, remember this is only a rule of thumb. After all,
the calculation alone won't factor in the home's condition, direction of the
garden, view, parking etc.
9. Negotiate
It’s still always worth negotiating on the price –
as a first-time buyer with nothing to sell, you’re in a strong position.
10. Get ready to go!
Once your offer has been accepted, it’s all
stations go. Click here to find out more. https://youtu.be/ok3UW66z8l0
Q1. Will I have a greater chance of being accepted
for a mortgage when buying a new-build or older home?
“Mortgage
lenders typically favour older homes, as new-builds can be harder to resell.
And history has shown they grow in value more slowly. To balance out this risk,
lenders tend to ask for larger upfront deposits on new-build homes.”
Q2. How can I be sure I’ll be recommended the best
deal – aren’t brokers paid a commission?
“Brokers
are paid a commission from the bank or building society when your mortgage
application is approved. And the amount of this commission varies.
“However,
brokers should not be influenced by this as, due to stringent rules set
down by the regulator (FCA), they’ll be held accountable for why that particular
lender and mortgage was recommended. They’ll also need to produce an audit
trail.
“Brokers
therefore select lenders and deals based only on eligibility, suitability and
affordability. However, it’s important to bear in mind this might not always be
the cheapest rate.
“It’s
important to use a broker, like, that deals with
the entire intermediary market. This means they compare mortgages
from all lenders that work with brokers, giving you the widest possible choice.
“Some
lenders though, such as First Direct, Lloyds and Yorkshire banks, are
direct-only which means they don’t deal with brokers at all.
“But if
the most suitable mortgage is from one of these banks – or it’s a one-off
‘direct-only’ deal from elsewhere – the same rules stand and that’s the
mortgage we’d recommend. You can then bypass us and go direct to the
lender to get it.
“Finally,
unlike many other mortgage brokers is entirely fee-free to our customers. So,
you can be sure you’re getting the best mortgage deal without spending
unnecessary broker fees to get it.
Q3. How many times my salary will I be able to
borrow?
“These
days, mortgage lenders tend to use affordability criteria to assess the amount
you can borrow. This involves totting up all your monthly outgoings, and
deducting the total from your monthly income.
“Lenders
then use the remaining income to work out what size of mortgage you could
afford to borrow – although the calculation will be ‘stress-tested’ and
based on a higher rate than the one advertised on the mortgage deal.
“This
means, if your outgoings are minimal – say £100 a month in credit card payments
– you might be able to borrow between 4.5 and 4.75 times your single or
household (joint) income. However, if you have lots of monthly financial
commitments the multiple could be a lot lower than this.”
Q4: How many years can I stretch a mortgage over?
“Most
lenders allow mortgage terms of 35 years with some – such as Nationwide,
Halifax and TSB – stretching to 40 years.
“However,
your age will be a factor. Lenders will want to see you have cleared the
mortgage, typically by age 70 or in some cases (Santander for example), by 75.
“If you
want to extend your loan beyond the maximum age limit, you’ll need to prove
you’ll have sufficient income once you’ve stopped working – from a private
pension for example – which will support both
your mortgage repayments and living costs.”
Q5: What credit score will I need to be accepted
for a mortgage?
“Most
lenders access your credit report through the two main credit reference
agencies, Experian and Equifax. With Experian the maximum score available is
999 – but Equifax doesn’t publish a score at all. Lenders will consider the
contents of the credit report instead.
“But
there is no set ‘score’ which will determine whether you get the green light on
your mortgage application. Your credit report is one of several factors lenders
will consider such as the size of your deposit, salary, any outstanding debt
and how well you manage your bank account.
“It’s
useful for first-timer buyers to know that, every time a lender accesses your
credit report, it leaves a visible footprint. Too many of these – especially if
you’ve been turned down – can have a negative impact on your score which can
put off other lenders giving you credit in the future.
“But some
lenders, such as Halifax and TSB, carry out what’s known as a ‘soft footprint’
which means the credit search is wiped from your report in 30 days, which can
be really useful for first-timers who need to protect their credit reports.”
Click here to find out more.
http://eepurl.com/bs3zeH
