First Time Buyers

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The Process for a First Time Buyer

Over the years with rising property prices, and more recently, rising interest rates it has become harder and harder for first time buyers to get onto the property ladder. First time buyers are at a disadvantage, as they have no equity in an existing property which could be used for a deposit on a new property. Many mortgage lenders appreciate how hard it is to get onto the property ladder for first time buyers, and they have special schemes to help make it easier.

Owning a home of your own for the first time is always exciting but estate agents and mortgage lenders will have to be dealt with, legal procedures understood and a whole lot more. It's hardly surprising it all seem scary to the first time buyer. This is where we come in. We can help with every step of the process. Helping you understand the buying process, finding the right mortgage, helping you find a quality solicitor or licensed conveyancer, and discussing the costs you should expect to have when you move into a home of your own. We give the first time buyer an insight of what it is like to own a home, and what you need to consider before you actually move in.

What is available to first time buyers?

First time buyers have access to most mortgage products in the market place, subject to meeting the lender criteria, but ther are special schemes which have been set up especially to help the first time buyer get onto the property ladder. These include 100% Mortgages for the first time buyer - ideal if you do not have a deposit. Up to 125% Mortgages for the first time buyer - ideal if you have debts that you wish to consolidate to reduce your outgoings, or if you wish to pay for extras such as furniture, solicitors costs etc. Shared Equity Mortgages for the first time buyer - ideal if you only have a small deposit, but wish to borrow a large amount compared to your income, First Start Mortgages for the first time buyer, where a parent can help support a mortgage application by allowing the lender to take their income into account as well - ideal if you have a supporting parent who wants to help you get onto the property ladder. You do not necessarily need a deposit for this type of scheme. Graduate Mortgages for the first time buyer - ideal if you have graduated from university within the last seven years as this type of mortgage will allow you to borrow more than a typical mortgage, usually at a more competitive rate. Professional Mortgages for the first time buyer allow you to borrow more than a typical mortgage, again usually at a more competitive rate. Professions with they take into account include Doctors, Teachers, Accountants, Vets, Barristers and many others. Finally there are guarantor mortgages, where a close relative will agree to guarantor your mortgage payments, so that the lender will be more willing to lend.

Some lenders will offer special incentives to first time buyers, such as offering to pay for the valuation, or paying a contribution towards the legal fees. You need to be careful as sometimes the first time buyer will end up paying a higher interest rate because of this. First time buyers will be enticed by many lenders wanting them to take out their mortgage, and it is sometimes difficult for a first time buyer to work out what is the best deal for them.

How much can a first time buyer borrow?

Many mortgage lenders now work on an affordability calculator, rather than lending a set multiple of your salary. Typically you could expect to borrow 4.25x joint income, or up to 4.5x single income. Some lenders will take Child Tax Credits, and Child Benefit into account. Lenders will assess overtime differently, with some lenders happy to use this extra income, and others only happy if it is guaranteed.

What else does a first time buyer need to consider?

All lenders will insist that you have buildings insurance and it is sensible to insure your belongings for a small extra premium in case you have a fire, a flood or are burgled.

You should also look at protecting your payments should you be unable to work through sickness, or unemployment as you will get no support from the state for the first 9 months. If after 9 months you do qualify for help, this can have an adverse effect on your credit rating.

It is also sensible to look at life insurance, and critical illness protection. Life insurance will ensure that the mortgage is repaid in full if you were to die. Critical Illness Insurance ensures that your mortgage is repaid in full should you develop a critical illness and not die. Examples of a critical illness include cancer, multiple sclerosis, insulin dependent diabetes, blindness, deafness, third degree burns. Most providers cover you for about 30 to 35 different events, but some cover you for about 150.

It is important that you pick a low cost, but competent licensed conveyancer. Many online conveyancers will quote a very low price - but then add on additional amounts, for example - the lenders mortgage costs. It is important to use a solicitor who will give you a fixed price at the outset with no hidden costs. You also want a solicitor who does not work on a high volume, so profit basis, so that they are too busy to deal with your case in a professional and effective manner. We work closely with econveyancer - who have over 150 solicitors and licenced conveyancors fighting for your business. After each transaction the solicitor is rated on their service levels, so not only do we know which offers the best value for money, we also know which offers the best service to their clients. We can then help you chose a solicitor on this basis.

Checking affordability for first time buyers

It is also important that as a first time buyer you are confident that you can afford the mortgage when you move, along with all of the other bills which you might have, such as gas, electricity, council tax etc. You can download a budget planner from our website which will help you decide on affordability. Also, our trained advisors can help you with this, to ensure that you are 100% confident that you can afford to live in your new home.