First Time Buyer

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Advice and guidance for First Time Buyers

A First Time Buyer is anyone planning to buy their first home to be used as their primary residence. In recent years it’s been difficult for First Time Buyers to get onto the property ladder, however, getting the right knowledge and preparing in advance of your application can be instrumental in obtaining a competitive mortgage offer.

Do I need an Agreement in Principle?

An agreement in principle, also known as a decision in principle, is a conditional mortgage offer from a lender, prior to your full application. This is by no means a requirement but can be beneficial to First Time Buyers.

Obtaining an agreement in principle prior to making a mortgage offer can increase the chance that your offer is given serious consideration by the vendor. First Time Buyers are in an incredibly strong buying position purely because they do not have to sell a property prior to buying and with confirmation via an Agreement in Principle this should ensure any offer made by a First Time Buyer stands out from the crowd.

The additional benefit as a First Time Buyer to obtaining an Agreement in Principle prior to finding a home and making an offer is peace of mind that the offer made can progress through to completion and avoid later disappointment of not being able to subsequently purchase the property you have fallen in love with.

How much can I borrow as a First Time Buyer?

The fact that you are a First Time Buyer shouldn’t determine how much you are offered by lenders. Your loan amount is calculated based upon your financial circumstances and credit score, much like any other applicant.

Your mortgage offers are likely to vary from lender to lender, as they all have their own criteria. To get an idea in advance of how much you might be able to borrow, there is a range of free mortgage calculators available online, however the accuracy behind these calculators is based upon input placed within and we would strongly recommend liaising with one of our Mortgage Brokers to ensure delivery of accurate outcomes to avoid disappointment. A Mortgage Broker such as ourselves can also help you check your affordability with many lenders in the touch of a button, saving you time and effort, whilst also checking lending criteria requirements alongside.

How can improving my credit score help?

Alongside your income, your credit score has the most impact on whether or not your mortgage application will be accepted. Before approaching any lenders to apply for a mortgage, it’s essential to be aware of your credit rating, taking steps to improve it, where needed:

How to improve your credit score

  • Check that your current address appears on all accounts in your name
  • Remain within 50% of your available credit for any existing credit agreements
  • Ensure you’re on the electoral roll at the correct address
  • Pay instalments on any credit agreements on time and in full, where possible
  • Some will have a low score due to never having taken credit. A special credit builder credit card can be helpful to show yourself as a responsible borrower

How much deposit do I need?

Some, but not all lenders may ask for a higher deposit from a First Time Buyer. For a standard residential mortgage application, you will need a deposit of between 10% and 20%.
If you have a low expendable income, it can be difficult to raise a large deposit. There are, however, some government schemes available aimed at helping First Time Buyers, which have more flexible requirements.

What help is available for First Time Buyers?

The Help to Buy Equity Loan Scheme and NewBuy Scheme both give you the opportunity to borrow a loan from the government, tax-free. Both schemes only require a 5% deposit, with the help to buy scheme loaning you a further 20% of the property value and the new-buy scheme giving you access to a 95% mortgage at a lower interest rate.

The shared ownership scheme is a particularly helpful option for those on a low income. It makes it possible for you to obtain a share of the property you want to buy, rather than the whole thing. Your mortgage only has to cover the portion that you buy, which means that both the deposit and monthly payments are much more affordable than when you buy 100% of the property. You will have to pay rent on the remaining share of the property, on top of your mortgage, however.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

What fees are involved with buying a home?

Arrangement Fees

Most mortgage lenders charge an administrative fee for the arrangement of the mortgage. This will vary from lender to lender. You may even find that some specialist lenders offer no arrangement fees for those in certain jobs.

Valuation Fees

You will need to have your chosen property independently valued, again, these fees will vary depending on the lender chosen.

Legal Fees

The mortgage application process requires the appointment of a solicitor, who will arrange conveyancing and local authority searches, usually payable directly to the solicitor.

Stamp Duty

Under normal circumstances, Stamp duty is due on the purchase of all properties and is based upon the value of your home, amongst other things. First Time Buyers currently benefit from an exemption on Stamp Duty on purchases up to £300,000.

How can Yellow Brick Mortgages help First Time Buyers?

Buying your first home can be intimidating. From trying to establish which type of mortgage is best suited to you, through to finding a lender offering competitive mortgage rates to First Time Buyers. Qualified and experienced Mortgage Brokers can be comforting and reassuring throughout the process of making life-altering decisions.

Even the most confident buyer, however, can benefit hugely from Mortgage Brokers’ advice. We have a wide market view, which gives us access to mortgage deals that you won’t find on the high street. This means that we can not only find you the most suitable mortgage deals available but are able to divert your efforts towards those lenders most likely to accept your application.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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