Are you thinking of taking the first step onto the property ladder? Buying your first home is an exciting but often daunting prospect, and with the current cost of living crisis and rising interest rates, it is important that this major financial commitment is taken seriously and is the right option for you. In this blog post, we share the step-by-step process of securing a first-time buyer mortgage deal.
Assess your finances – how much can you afford?
Due to the excitement that comes with purchasing a first-time home, many do not settle on a realistic budget, which can result in financial difficulties later on.
To secure a first-time buyer mortgage that works for your circumstances, you must assess your finances thoroughly. This includes reviewing your current income and spending habits as well as any debt you may have accumulated.
By getting a clear picture of your finances, you will be able to determine what you are comfortably able to afford to pay each month in mortgage repayments. It is important not to overstretch, as you need to consider the possibility that interest rates will rise.
Create a deposit
Remember: The deposit savings are not used just for the downpayment of a property, they can also be used to cover mortgage fees and Stamp Duty Land tax at the end of your property search.
Saving for a deposit can be the most challenging part of securing a first-time buyer mortgage. While government schemes are available (such as the 95% mortgage), for some candidates they’re not always the best option as a lower deposit can incur higher interest rates on the monthly mortgage repayments.
If possible, save up to 10-15% of the property’s purchasing price, this will ensure that interest rates are manageable and that your monthly repayments remain low.
Apply for an agreement in principle
To secure a first-time buyer mortgage, you must produce and sign an agreement in principle (AIP). This agreement is an estimate from a mortgage lender or broker about how much you will be eligible to borrow, which is based on your financial circumstances and the personal information you have provided.
The purpose of this agreement is to give you an idea of what you can borrow and give you a clear guideline of the properties within your price range – it is not a mortgage offer.
Select a mortgage deal
When the perfect property has been found and an offer has been accepted, it is time to make a formal mortgage application.
Whether you conduct your mortgage application through a mortgage broker or directly through a lender, they will request:
- proof of identity
- proof of government benefits – if applicable
- P60 form from your current employer (or most recent tax return documents for self-employed candidates)
- your last three months’ payslips (or 2-3 years of accounts if self-employed)
- bank statements of your current account for the last three to six months
Remember: Being honest about your personal and financial situation and keeping open communication with your broker or lender is crucial to securing a mortgage that works for you.
Once these checks have been made, it’s time to evaluate the current market and review types of mortgages.
There are many options for first-time mortgage holders, such as fixed-rate mortgages or variable-rate mortgages, and for unbiased, whole of market advice, it is recommended to seek the services of a qualified mortgage broker.
Consult with a mortgage broker for your first-time buyer mortgage
By getting mortgage advice and support from a mortgage broker, they can scout the market on your behalf and save you time spent trawling through deals. They also have access to deals that are not directly available to customers.
The Mortgage Brokerage is an independent team of mortgage brokers that are dedicated to giving our clients the most straightforward advice for securing mortgages, including first-time buyer mortgages, and providing a dedicated and personal service to each customer, taking the time to understand your unique circumstances and financial situation.
For UK-wide mortgage advice from our team of experts, contact our advisers today at 0191 4326177 or drop us a message here.
*DISCLAIMER: Your home may be repossessed if you do not keep up repayments on your mortgage.
