Before looking at properties, you need to save for a deposit.
Generally, you need to try to save at least 5% to 20% of the cost of the home you would like.
For example, if you want to buy a home costing £150,000, you’ll need to save at least £7,500 (5%).
Saving more than 5% will give you access to a wider range of cheaper mortgages available on the market.
Apart from your monthly mortgage payments, there are others costs when buying a home.
First-time-buyers will pay no Stamp Duty on the first £300,000 for properties worth up to £500,000.
As a first-time home buyer, the most important thing to bear in mind is whether you can really afford to take this step.
It’s wise to put together a budget before you start looking for a property.
There are now strict checks when you apply for a mortgage.
Lenders will check you can afford the mortgage and also ‘stress test’ your ability to make your payments if interest rates were to rise or if your circumstances changed, such as a planned retirement date or if you started a family.
As part of the mortgage application process you’ll need to show the lender evidence of any outgoings you have and prove your income.
Several government-backed schemes aim to give home buyers a helping hand onto the property ladder.
If you can use one of these schemes, lenders will still want to ensure you can afford to pay your mortgage.
There are many different mortgage deals to pick from, so choosing the right one for you can be tricky.
It can depend on several things, so it’s a good idea to do some research and talk to experts such as mortgage brokers.
If you want to buy a house, it’s likely you’ll buy the freehold, meaning you own the property and land it sits on.
If you’re buying a flat, you’ll be buying leasehold, or buying into a share of the freehold.
Whichever mortgage you apply for, your lender will want to know you can continue to make your repayments.
Even if interest rates rise, or as a result of any planned events affecting your financial circumstances.
You’ll need to provide evidence of your income, and provide information of your outgoings, including:
To prove your income, you might have to produce payslips and bank statements.
If you’re self-employed, you could be asked for tax returns and business accounts prepared by an accountant going back two tax years.
If you’re struggling to get a mortgage to buy your first home, you might want to consider a guarantor mortgage.
This means a parent, guardian or close relative agrees to be responsible for paying the mortgage if you cant.
Guarantor mortgages shouldn’t be entered into lightly. They’re legally binding arrangements.
Your guarantor needs to be able to afford to pay your mortgage if you get into difficulty.
You’ll need to talk to a mortgage broker to find out more about which lenders offer guarantor mortgages.
Read the full article from The Money Advice Service here >