Buying your first home may excite you but, you may also find it overwhelming and confusing, especially if you have little knowledge about the process and legal requirements. But, with the right advice and guidance, your home buying experience should be manageable.
In this guide, you will learn about the essential things you need to do before buying your first home. So, let’s get started!
- Prepare Your Home Deposit
The first thing you need to do before buying a home is to save up for your home deposit. Since a deposit is required before you can actually buy a property in the UK, most first-time homebuyers find this step quite challenging.
In normal times, homebuyers need to have at least 5% of the property’s purchase price deposit before they can have the property. But, since today has been challenging for many, some lenders have changed their criteria and many now require 10% of the property’s purchase price as deposit. That’s quite a lot compared to before, so you really have to save up before buying a home.
- Consider Ways to Boost Your Savings
As a homebuyer, you need to explore every means possible so that you can boost your savings for your home deposit and interest rate. The good news is that the government in the UK has this initiative wherein they can help you grow your deposit and buy your first home more quickly.
This initiative is called the lifetime Isa. You can apply for a lifetime Isa if you’re under 40, saving to buy a property worth up to £450,000. This program will allow you to save up to £4,000 each year until you’re 50, and for every £4 you save, the government will add £1 to your savings. Just make sure you don’t withdraw your savings unless it’s to buy a property. If you don’t want to use the money for a property then you must not withdraw until you are 60 or over otherwise you will face a 25% withdrawal charge.
- Know How Much You Can Borrow
It’s totally understandable if your savings will not be enough to purchase property since it is truly expensive. Fortunately, you can apply for a mortgage. However, you need to know how much you can borrow so you can gauge how much you still need to save up. Usually, lenders will allow you to borrow a maximum of four and a half times your income. You can calculate your borrowing power using a borrowing calculator or consult an adviser on which mortgage products fit your needs.
- Explore Mortgage Options
It can be challenging to save a 10% deposit to buy your first home, and the reduction in 95% mortgages is a heavy blow. Fortunately, lenders are now offering more 90% deals, Help to Buy, shared ownership or guarantor mortgages.
One of the most popular mortgage options you can explore is the guarantor mortgage. Here, you can ask a family member to use their savings or property as collateral so that you can purchase a property. There are other deals available, and it’s best to consult your mortgage broker about what kind of deal is best for you.
Conclusion
While buying your first home is such an exciting journey, you still need to face a daunting process, which you need to prepare for. This guide will help you come prepared before buying your home. Aside from doing these essential things, it would also help if you have a reliable and accessible mortgage broker with whom you can consult on your first-time home buying plans.
If you are looking for the best mortgage brokers in Chester, you’ve come to the right place! A Move Brokers has a team with decades of experience in helping first-time buyers take that first step onto the property ladder, making the process of getting your first mortgage as simple and as stress-free as possible. Get in touch with us today to arrange a free initial consultation!
This article is for information only and should not be seen as advice or a recommendation to act.
As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.