Getting onto the property ladder is a massive goal for most people in life, however, it can be a daunting and scary time as it is a big investment and there is also a lot of conflicting advice out there, so let our advisors give you the correct and best advice possible for your personal circumstances. Buying your first home can be an experience you’ll never forget, while the actual process of house-buying only starts once you have found a property that you might wish to call home, planning ahead can give you a huge advantage when it comes to getting the home you really want.
We recommend accumulating as big of a deposit as possible and this is because the deposit is the lender’s protection. When deciding whether or not to accept a mortgage application the lender will have to think about the possible challenges the borrower may face, this may be periods of unemployment, or if they start a family they would have less disposable income. The bigger the deposit the less exposed the lender is to changes. With a bigger deposit, it will mean that you will have small monthly repayments and this will therefore be seen as more affordable.
It is a good idea to set some money aside for moving costs as buyers may be liable for stamp duty and will need to pay solicitors and surveyor’s fees. The actual cost of moving from A to B and furnishing the home will depend on a variety of factors. It can, however, be useful to have a budget for unforeseen expenses. In other words, funds available to deal with anything about your new home that you only noticed once you had moved in. Although not strictly a home-purchasing cost, new homeowners household items as the need arise.
You can also check to see if the government have any help to buy schemes available to help people buying new-built homes. Provided that buyers can put down a deposit of at least 5%, the government will lend up to 20% of the purchase price of the property. This means that the buyer only needs to get a mortgage for the remaining 75% of the purchase price. The mortgage guarantee scheme can be used to buy either new-build or pre-build property. In this scheme, lenders essentially insure a part of the mortgage with the government. This means that they are guaranteed to get that part of their money back even if the borrower becomes unable to make repayments. Of course, there are rules and limits for both schemes which means that they may not be applicable to, or suitable for, everyone.
Family members can also help you to secure a mortgage, older people who have had more time to accumulate personal wealth may be willing to act as a mortgage guarantor for younger people that they trust. This can be helpful for people who might struggle to meet affordability criteria as applied objectively by lenders. It could also be helpful for people who’ve had a chequered financial history and whose credit ratings are therefore less than pristine.
If you are self-employed you are still able to get a mortgage and it is surprising how many self-employed people don’t think that they can get a mortgage. The reality is that lenders are all to aware of the situation that self-employed people are in and they have a stright-forward process in place to work out how much they would be prepared to lend. Lenders will vary in the amount of time it is expected an applicant will have to provide edvidence of income for. Most will look at the income recieved over the last two or three tax years and either average it out or take the most recent year as a basis for calculation. If you do have a good profile, some lenders will make it possible to get a loan with just one year’s set of accounts (completed tax return).