Getting ready to buy your very first home is one of the most important and memorable moments in your life. It’s an exciting time, but also an extremely challenging one, as finding the money, property and mortgage to suit your circumstances takes a lot of time and effort.
However, with the right preparation and planning you can overcome any worries you may have to find an affordable property you can’t wait to settle into. To get you started we’ve listed 7 ways first time buyers can get ahead on the property market below.
Check the mortgage market
In order to get the very best mortgage deal you need to look at the full range of options available. It’s easy to be tempted by a great deal but given the commitment involved you should never rush into anything.
There is also far more to look at beyond the repayment rates they offer. For example, do you want a fixed or variable mortgage? A repayment or interest only deal? Keep an eye on whether interest rates are set to be raised by the Bank of England in the foreseeable future as this will have a direct impact on monthly outgoings for a long period of time.
Manage your credit
The process of getting a mortgage has become a lot more stringent since the financial crash in 2008 with lenders tightening up the process. In 2017 the Bank of England toughened the rules even further. This means the check on your ability to maintain the repayments is far tougher and your credit background needs to be in good shape.
The best way to do this is just to make sure you are up-to-date with any credit payments on anything such as credit cards, loans and ensure even mobile phone contracts are debt free. You should also check your credit report via someone like Experian which will allow you to correct any outstanding issues on your rating.
Plan your finances
Part of the check lenders will carry out revolves around the amount of money you earn versus your financial outgoings. The idea is to check that you can afford the mortgage payments on a long-term basis especially if there is a change in your circumstances, such as having children, changing jobs or affordability after a rise in interest rates.
Put together a clear plan of the money coming in and the regular payments made on a monthly basis. Try to save where possible, cut out any unneeded luxuries and clear any outstanding overdraft as this will all have an effect on the final decision.
Save for the deposit
Getting together the deposit for your house is one of the most important parts of securing a new property. In general terms you will need to have anywhere between 5-20% of the total cost of the property, depending on the lender and your credit history.
Although this is a lot of money, the good news is that the more deposit you have available, the lower your monthly repayments will be. You will also need to have money put aside for things like stamp duty (although this is not required for the first £300,000 paid on properties worth up to £500,000) and associated legal costs. Place your savings into a savings or ISA account that offers the best interest rate to get the best value possible.
Searching for a property
Once you have all your finances in order and believe you can afford the mortgage and deposit you can then start to look around for your first home. Location plays a key role here as you will need to determine how close to work or family you need to be, along with transport links and any extra costs that might entail.
You will also need to think about the amount of bedrooms you need – especially if you are hoping to start a family – whether you want a new or old build, semi-detached, detached and parking, if you own a car. Always remember you have a budget to stick to so be realistic and prepared to compromise where necessary.
The moment of real excitement arrives once you find a property you love and want to put in a bid to buy it. The estate agent is acting on behalf of the seller and it helps if you can get independent advice when trying to negotiate. Be careful not to be too hard in negotiation as you may price yourself out of a property you want to live in.
Your first bid should take into account the prices of nearby properties while also remembering it is only worth what someone is willing to pay. If you can also find out how long it has been on the market, how urgently it needs to be sold and how many other bids they have, then this can help you determine the right bid level to go in with.
Choose a good estate agent
One of the most valuable assets available to you during the search process will be the estate agent. They are the experts in this field and are a hive of advice and guidance for first time buyers. You should be able to rely on them to educate you from start to finish while always keeping your best interests front and centre.
A good estate agent will add real value to your experience and be on hand to explain anything you are unsure of and answer any questions you may have. In many cases they are the key to ensuring the process is as smooth and pain free as possible.