7 FIRST TIME HOME BUYERS TIPS

7 FIRST TIME HOME BUYERS TIPS

Purchasing a home can be trying for new time buyers. All things considered, there are many steps, tasks, and requirements that need to be done that may leave the novice buyer restless about committing to a costly error.

However, buying your new property shouldn’t be rocket science. With proper property research and guidance one can smoothen their journey from renter to homeowner.

That’s why we at Savvy Women Group have taken the time to compile these tips for you to consider as you begin your property investment journey.

Remember to thank us later!

SAVE A DEPOSIT

A deposit will always be needed when making a purchase on a property, so it is important to start as soon as you are able to. Even if you can put in little each month, something is better than nothing.

On average a deposit sits anywhere between 5% – 15% of the property value. The remaining 85% – 95% is borrowed from the mortgage provider.

A good thing to keep in mind, the bigger the deposit you put down the smaller the mortgage will be and less interest paid out in the long term. A larger deposit can also secure a better mortgage deal and possibly even your dream home.

INCREASING YOUR DEPOSIT FOR FREE

Some people would have heard of a Lifetime ISA (LISA) this is what can help you save and boost your deposit up to a maximum of £1000 every financial year.

You must be aged between 18 and 39 to be eligible to open a LISA account, saving up to £4000 a year from your own contributions to buy a property, for retirement or both. These contributions are then supplemented by the government with a bonus of 25% of the figure you are putting in up to a maximum of £1000 a year.

In order to use these funds from your LISA account you must have the account open for at least 12 months and can be used to purchase your first home values up to £450,000.

Before a LISA account there used to be a Help to Buy ISA scheme, but opening any new accounts ended 30 November 2019.

This is where you need to be careful because of the common misconception some people believe, they can use their LISA and other ISA accounts they might already have towards a home. This is incorrect, as you are only eligible to use the bonus from one of them towards buying a property.

RESEARCH

This is something I cannot stress enough, when signing a contract to own your first home more than likely this will be your only experience. It is scary, exciting and something many people might rush. Some things to consider when buying your first home:

1. How much budget do I have

2. How long will it take to save for a deposit

3. Where do I want to live

4. Start looking at houses available

5. Register with estate agents

6. Who will I get a mortgage with

7. What is stamp duty

8. How much stamp duty do I have to pay

It might seem there are a lot of questions and information to look through. The truth is, there is but it does not stop you from enjoying the process of buying your first home. As long as you start doing research in advance, seek out advice and help where and when you can then you can’t go wrong.

GOVERNMENT SCHEMES

The government’s Help to Buy scheme which aims to assist first-time buyers can help you get onto the property ladder quicker. Here is how this scheme works. You have an equity loan which involves you putting down a 5% deposit where the government will then loan you 20% of the deposit free of interest for the first five years.

Here you will already have 25% of the deposit with the remaining 75% coming from a mortgage provider.

The next stage of this scheme is a shared ownership, allowing you to purchase as little as 25% or as much as 75% of a property. You would then pay rent on the rest of the percentage you do not own.

While one government Help to Buy might have ended in November 2019 other schemes are always being put in place to help people get onto the market. As part of the research side of things keep an eye out for any new schemes that might suit you.

A POSITIVE CREDIT SCORE

When the time comes for you to apply for a mortgage, lenders will look at your credit history to see if you have borrowed money in the past and how you managed this. This information will be used to help them assess whether to loan you a mortgage.

· Always make debt repayments on time.
· If you have credit cards not in use make sure to close these down.
· However if you do have a credit card make sure the balance is paid off in full each month.

It is always advisable to get a copy of your credit report from a credit reference agency, an example being ClearScore and Experian. This way you can see the information held on your credit report is correct.

CONSIDER BUYING WITH SOMEONE (Partner, Family or Friends)

Purchasing a property by yourself is not something many people out there can do, so if you have a partner, friend or family member that wants to move out too this could be a great start.

Although it is good to keep in mind what will happen if you buy with a friend or family member, what might happen if one wants to sell at a later date? And then how you will divide the property between the two of you, even more so if one person has paid out a larger share of the deposit.

If you decide to buy jointly it is then possible to either own the property as joint tenants or have the option as tenants in common.

SEEK HELP FROM YOUR PARENTS

This point does not always mean Mum and Dad have a huge deposit saved up ready to hand over to you. However, if you are able to stay living at home for a few years then make use of saving up.

Your parents savings can be taken into consideration by some lenders when applying for your mortgage, the money will still be in their name but they act almost as a guarantor for you.

It puts the lender in a position of greater security with the possibility of not only landing a mortgage but one with a better rate

If you are lucky enough make use of this point then do so!

CONCLUSION

Like any huge undertaking, an effective home purchasing experience is all about getting the details right from start to finish. So ensure you’re taking the time to educate yourself about the buying process and never shy off from seeking professional help.

All the best as you take this first step into home ownership!

You can reach out to us via email for a free discovery call if you need more information about property investment, starting a property savings kitty or working out your property budget.

 

Email: contact info@savvywomen.co.uk.
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