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A First Time Buyer is someone who is looking to buy a property for the first time. There are a lot of things to consider when it comes to mortgages, for instance, mortgage terms, interest rates and the process required to be able to purchase a property. Get in touch with an expert at CD Financial today to receive tailored advice and guidance when it comes to mortgages and applications as a First Time Buyer.
First Time Buyer: A Guide to Mortgages
What is a First Time Buyer?
You are considered a First Time Buyer if you are someone who is looking to buy your first home, whether it be a house, flat or in some cases even a boat! There are no specific First Time Buyer mortgages out there but there are schemes in place to help you to get onto the property ladder.
As a First Time Buyer you will be desired among lenders as you have no chain of property behind you that they need to consider. You will need to plan and work out how much you can afford in monthly payments before choosing a mortgage especially before you apply for a mortgage.
What is the process for First Time Buyers?
There is a process to follow as a First Time Buyer, you need to find a property that you can afford and put an offer towards buying the property. You need to then get a valuation of the property and will need to arrange a solicitor and surveyor. This will be so that they can go into the property and check the value as well as handling all the legal documents when it comes to your mortgage application.
There are a lot of schemes available and different ways to get on the property market and a lot of different types of mortgages too. It would be worth seeking mortgage advice for a mortgage adviser at CD Financial to ensure you are committing to the right mortgage term for you.
What is an Agreement in Principle?
An agreement in principle is simply a lender giving you an amount that you could potentially borrow, it is just an estimate and not considered an offer. They are not legal or necessary but they can be useful when it comes to house hunting and knowing what you may be able to afford and showing sellers you are committed to buying a property.
To receive an agreement in principle you will undergo a soft credit check and can apply online, over the phone or to your chosen lender directly. If you seek help from a mortgage expert, they will do this process for you should you wish to. You need to make sure that your credit is in check and you have cleared any debts that you can before applying for one as bad credit will impact your mortgage application.
You can also use an online mortgage calculator to give an estimate of how much you might be able to borrow before approaching a lender if you do not want to undergo the credit check or approach any lenders yet.
How much can a First Time Buyer borrow?
If you have a good credit score then you will be able to borrow up to five times your annual income as a mortgage loan. A bad credit score can mean that lenders offer you higher mortgage rates as you will be deemed a high risk borrower.
There are a range of different lenders out there and even ones who will accept you onto a mortgage with bad credit. A mortgage adviser can help to explore your options no matter your circumstance and find the right lender for you.
How do I know my credit score and how do I improve it?
You can check your credit score online through sites such as Experian and TransUnion. You need to keep on top of your credit in order to be able to purchase a property. You can improve your credit score by getting your finances in order.
- Paying off any debts that you owe
- Register on the Electoral Roll
- Avoid your overdraft and payday loans
- Close any unused accounts
- Make sure you are not financially tied to your old housemates
- Take out a credit card (if you have no credit)
Having no credit is almost as bad as having no credit as lenders want to see a history of your borrowing and that you are reliable when it comes time to pay it back. There will be options out there for you if you do have bad credit and want a mortgage but sometimes it can be worth waiting and improving your score in order to access lower mortgage rates.
What deposit will I need?
You need to aim to save at least 5-20% of the property’s value as a deposit. There is help available for First Time Buyer and the bigger the deposit the better. More money upfront makes you more attractive to lenders and sellers too, it shows that you are invested in the property.
What help is there for First Time Buyers?
There are a few government schemes in place to help out people taking their first step onto the property ladder. For example there is the Help to Buy scheme in which when you provide a 5% deposit, the government will match it with another 20%. This is an equity loan which is interest free for the first five years.
You can buy a property under shared ownership in which you buy a certain percentage of the property and pay rent on the remainder until you can afford to own it yourself. This option is not widely available and there are criteria you will need to fulfill.
There is a new build scheme in which when you buy a property under the scheme you get discounted rates and incentives to take a mortgage deal out. There are a lot of other options too and it would be worth getting in touch with a mortgage expert to explore them further.
How can CD Financial Mortgage Advisers help me?
Here at CD Financial we have access to the ever-changing independent mortgage market, this means we can access interest rates and mortgage deals that are not available through high street lenders. As a First Time Buyer it can be daunting and scary not knowing the mortgage process and we are here to take the stress away.
We will understand your current financial situation and what type of mortgage you are looking for, then cater to your needs. We will tailor advice and pick the right options for you as well as educating you throughout to ensure you are aware of the commitments you are making along the way. There are plenty of lenders out there waiting to help you take the step into the property market so get in touch with a mortgage expert today.