Being a First Time Buyer can be an exciting – if not a little scary – time. As new starters in the area of property ownership and property finance, it may mean that you are not quite as well versed with some of the key points to look out for. There are also things to be aware of as you start your journey towards owning your first home. In addition to seeking out expert financial advice through the use of your 177 Mortgage adviser, here are our eight tips for First Time Buyers to keep in mind as you take your first steps on the property ladder.
Get familiar with your credit score
The importance of having a good credit score, especially as a First Time Buyer, cannot be underestimated. Lenders will always require to see this, so having knowledge of how your credit report looks prior to them doing so is always worthwhile. It will also stop any nasty surprises when you start the application process. There are a number of providers that allow you to do this; from Experian and Equifax to Credit Karma. There are also a number of banks that offer the service as part of your current account service. By checking your report, you will get a good indication of how to improve your score. Sometimes, these can be quick and easy wins: such as ensuring you are on the electoral register and making sure any cleared or unused credit cards or accounts are closed down. We have more tips on getting financially fit ahead of making your application for a mortgage.
Pay off as much debt as you can
When your lender receives your mortgage application and credit report they will be able to see your current financial standing. Any outstanding balances left on credit cards or hire purchase agreements will be visible. This will have an impact on your affordability – the amount of money you have left each month, to make your mortgage payments. In essence, the fewer debts and outgoings you have, the more you may be able to borrow. Likewise it’s a great tip for First Time Buyers to have demonstrated that they can use and manage credit. So having a track record of some sort of finance or credit agreement that you have paid-off and managed well, will show you can make payments on time and manage a debt.
How large is your deposit?
It probably comes as no surprise that the more money you have available to put down as a deposit on your new house, the lower the repayments will become. The larger your deposit, the greater the choice of products available to you. Though it may seem a difficult task to save for a larger deposit, in the long run, the savings to be made will make it all worthwhile. There are also lenders who will accept gifted deposits from family members, and recently we have seen 100% loan-to-value products reappearing on the market.
Incomings, outgoings and affordability
We would always advise that before getting your hopes up and starting the journey towards a mortgage application that you take the time to sit down and work out your finances. You need to be comfortable with the long-term monthly commit that taking out a mortgage involves. Work out your incomings and outgoings and then see how much would be left for mortgage payments, whilst also taking into account your day to day living costs (which your lender will do). You can find helpful budget planners online – there are lots of versions available to print, editable downloadable spreadsheets or app-based. But be careful to find a free version – or if paying take advantage of any free trial period! You can then get a rough indication of how much you may be able to borrow by using our mortgage calculator.
Are you in a stable position?
When applying for a mortgage it is not just your finances that come into question from lenders. It is also your reliability to continue to bring in a wage that can pay your mortgage. Therefore, if you are looking to change careers or move jobs, it may be worth holding out until you are in your new home. Lenders will want to see around at least 6 months of employment with the same company on the application they receive. This shows them that you are a stable and reliable applicant.
Keep all documentation
All lenders will need proof of income. Always keep hold of your payslips and P60 documents. These are what lenders will ask for to confirm that the amount they are lending is affordable for you. In addition to your employment documents, remember that at least three months’ bank statements will also be required. This will again clarify your incomings and outgoings mentioned above.
Start with a goal and stick to it
To ensure that your application proceeds swiftly and without any issues, make sure that you are on track with a single vision from start to finish. Once underway it is important not to change any of the details of the application to ensure the case runs smoothly. Try not to open any new accounts, take out any large hire-purchase agreements or change your lending amounts and ensure that all outgoings are declared in full at the start of your application.
Speak to an adviser
We have years of experience in mortgages and helping clients find the best deal for their circumstances – whether for a First Time Buyer, a remortgage client, or someone looking for specialist finance. Rather than approach a lender directly, always check with our team of knowledgeable, dedicated advisers as we have access to many lenders and products that are not available on the high street. As we are a fee-free mortgage brokers we will never charge you a penny for our advice and services.
If you have found our tips for First Time Buyers useful or would like to discuss how a mortgage broker can help? Get in touch to understand how we can make the dream of owning your own home a reality.