Five tips for first time buyers

Five tips for first time buyers

1.    Start saving for a deposit as soon as you can

The average age of a first-time buyer is now around 32 so use your twenties wisely as a time to start saving. The average deposit is around £45,000 so consider opening a Lifetime ISA that lets you save up to £4,000 every tax year towards a first home or your retirement, with the government adding a 25% bonus on top of what you save. That means you could get a chunky £1,000 of free cash annually. Plus you earn interest on whatever you save, and as it’s an ISA, that interest is tax-free. You could move back home with parents for a year to reduce rental costs and reduce outgoings. Having a bigger deposit means that you will be borrowing less with a lower loan to value (LTV), so you could be eligible for a mortgage with a lower interest rate.

2.    Look at your credit rating

Your credit score will be checked lenders. Make sure you have a credit history by paying off credit cards in full on time each month as well as any subscriptions and council tax, as missed or late payments can reduce your score.  Always pay your rent on time. Close credit cards you don’t use and avoid applying for credit six months before your mortgage application which could show a reliance on credit. Register on the electoral roll at your current address.

3.    Find out how much you could borrow

A mortgage broker will look at your finances and advise how much you could borrow and offer you a mortgage in principle to show you are a serious buyer. First-time buyers will not have to pay stamp duty to pay on a home costing up to £425,000 until 31 March 2025 so this could help with budgets. You may be eligible for a 100% mortgage or the Mortgage Guarantee scheme which requires as little as 5 per cent deposit. If buying  a brand-new property, a green mortgage can offer cash backs or lower interest rates as the property will be more energy efficient. You may also find development specific offers such as deposit matching which could reduce your LTV and help you access a lower interest rate or Deposit Unlock requiring only a 5% deposit.

4.    Compare prices in your chosen area

Thoroughly research the area where you would like to live, you may have to consider a smaller property to meet your budget or move slightly further away or be less close to transport to improve affordability. Finding a home that has potential to extend at a later date could also save on future moving costs which can be reassigned to an extension. You could also consider Shared Ownership where you buy a percentage of the property and pay rent on the rest, buying extra shares as you can afford it.

5.    Consider extra financial help

The bank of mum and dad is still featuring highly when it comes to putting down a bigger deposit but there are many other ways that lenders are accepting parents help from interest earning cash deposits that offset your mortgage to income boosters and borrowing against their own home to help. There are many options to getting on the ladder and you could find yourself a proud homeowner sooner than you think.

Contact us today and let us help you get your move underway.

Arins - selling & letting homes in Wokingham, Lower Earley, Tilehurst, Reading and Winnersh since 2009.

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