With house prices still rising, and applications for Help to Buy coming to an end, prospective first time buyers might feel as if the deck is becoming even more stacked against them. But there are clear steps they can take to put themselves in the best position to buy their first home and avoid property purchase pitfalls.
1. Boost your credit score
Put yourself in the best possible position to secure a mortgage by reviewing your credit score. Whether missed payments during Covid-19, a lack of an address or an electoral roll, or a dispute with a utilities provider, small issues on your credit file can have a big impact on getting a mortgage. So it's important to contact a credit reference agency for a report to understand what you can correct or improve.
2. Use a mortgage broker
If you’ve never taken out a mortgage before, it can be a daunting process, and difficult to understand the range of options available. Don't overlook using an independent mortgage broker, as many first time buyers often do. They will look at your circumstances and search the market for the best option to suit your needs. They can help you navigate the complicated process, improve your chances of getting accepted for the best mortgage deal for you, and oversee the whole application process from start to finish - taking away some of the pain in the process.
3. Ensure you're match fit to move
The property market is very competitive. So you need to be able to move fast if you need to. This means being prepared. Before you start making offers, appoint your conveyancer ahead of time, and make sure you have the paperwork done early. This includes securing your agreement in principle for a mortgage. Having the paperwork done beforehand will ensure that when you find your dream house you can make a compelling case to those selling the property, know your budget, and move as quickly as needed.
4. Boost your deposit
With the number of high loan to value deals falling and the Government's Help to Buy scheme coming to an end next month, the options for those with smaller deposits is shrinking. And with monthly mortgage costs rising, the size of your deposit has never been so important.
But there are options out there. Some private specialist lenders like Even have entered the UK mortgage market to help buyers boost their deposit, so that those who can't rely on the Bank of Mum and Dad don't lose out.
There is some government support available after October to make your deposit go further. The First Homes scheme involves the building of new homes specifically to be sold at a discount of at least 30%.
5. Don't forget moving costs
Whether valuation fees, the cost of a survey, a conveyancer, mortgage product fees, removal costs, or buildings insurance, it's crucial that you factor in the expenses involved in buying your first home. Stamp duty is often the biggest. Properties in England up to £300,000 does not incur a cost for first timers, but you will face tax on any value over this threshold. You can use an online calculator to help you work it out. Accounting for these costs will help give you a realistic idea of your deposit – or savings left over to personalise and renovate your dream home.