Buying a house for the first time is an incredibly exciting prospect, whether you’re moving in with your partner or going it alone, it can also seem like an impossible process. With that being said, many people avoid applying for a mortgage altogether and spend their pennies on the rental market. However, our aim is to take the fear out of the process and make your mortgage application as seamless as possible. So we have gathered the advice you will need to get the ball rolling and hopefully, with our help, you will get the keys to your new home in no time.
Deposits for a First-time Buyer Mortgage
One of the biggest difficulties presented to a first-time buyer is the deposit. Your deposit amount is a very persuasive factor to a mortgage lender. To them, having a healthy deposit amount is a big tick and as the buyer, it will open up many more mortgage deals that will be available to you. In short, having a good deposit is a win-win. However, for first-time buyers, saving up a good deposit can be a challenge. Lenders have recognised this difficulty and therefore are more susceptible to the minimum deposit amount, which is 5% of the value of the house. You may have heard of 100% mortgages, but they don’t tend to be around anymore, so it’s best you don’t consider them as an option.
If raising enough money for a deposit is preventing you from taking your first steps on the property ladder, then you may want to look into government schemes. Help-to-Buy is a government-backed equity loan scheme that is available on new build homes. The scheme covers 20% of the costs, meaning you need a 75% mortgage and only a 5% deposit.
The Help-to-Buy scheme is a good route to go down if you don’t have any savings and subsequently, you will struggle to gather a healthy amount of cash for a deposit on a first-time buyer mortgage.
Increasing Your Chances As A First-time Buyer
There is no perfect template for a first-time buyer, as every lender is different and therefore, their requirements can also vary. However, there are some factors that will increase your chances of being accepted for a first-time mortgage. Your credit score will give lenders an idea of your affordability and your repayment history, therefore, having a good credit score will give lenders a good impression of you as a borrower. A tarnished credit report can immediately put you on the back foot in your mortgage application, so avoiding the likes of CCJ’s, defaults and missed payments will pay off when it comes to getting a first-time buyer mortgage.
As a first time buyer with a poor credit score, you may have applied for a mortgage already but have faced rejection. This can not only be extremely disheartening, but it can also damage your credit score even more and is something you should be mindful of before you start applying for a first-time buyer mortgage with lots of different lenders – take it from us, it will do more harm than good.
How Much Can You Borrow?
As a first time buyer, knowing how much you can borrow can be invaluable. We cannot give a general figure for how much you can borrow, because there is not a one size fits all approach to mortgages. However, most lenders will base the amount they will lend you around your salary and monthly outgoings. Typically, rates are around 4x your salary, with the option to fluctuate either way depending on how a lender views your affordability.
Get In Touch
At Mortgage Advisory Network, our mission is to find you the most suitable mortgage deal. As a first time buyer, you may have some burning questions, or you may want guiding in the right direction in regards to your mortgage. If this is you, then give our Halifax or Harrogate office a call today and one of our experts will tell you everything you need to know – with no strings attached.