Buying your first home is a big commitment, and you have many decisions to make along the way. It can feel like a whirlwind of activity, and it’s easy to get lost and make mistakes along the way. If you’re a first-time buyer, here’s a quick guide to avoiding some of those pitfalls.
1. Getting Just one Rate Quote
A lender will undoubtedly try to get you to give them an exclusive deal when you first fill out a mortgage application but be wary of signing up for such a deal. Lenders will offer a lower rate in return for locking you into their mortgage for a certain amount of time. Usually, this will be the best rate that you’ll get, and the lower interest rate may seem like a good deal, but you can often benefit more by shopping around more, particularly in today’s low-interest-rate environment.
It’s important to compare all of your options before you lock yourself into a specific lender, and you should aim to get at least three quotes before making a decision. Doing so will help you to see the full picture, which will allow you to make an informed decision that is best for you.
2. Making a Down Payment That’s Too Small
You can usually find the lowest down payment on a mortgage if you opt for a fixed-rate mortgage. The longer the mortgage term, the smaller the down payment will be. While it may seem like a good idea to go with a 15-year mortgage with a super-low down payment, you may end up regretting it down the road.
When you make your monthly mortgage payments, you’re essentially paying interest on your interest. With a 15-year mortgage, you’re paying that interest for 15 years. You’re getting a lower rate on your mortgage, but you’re also getting a much higher overall cost of your home. A 3.5% interest rate over 15 years means that you’re paying over 40% more in interest when compared to a 30-year loan.
3. Viewing Properties too Quickly
If you’re looking at a few properties, and they all seem to have pros and cons, the first thing to do is to clear your head and view the properties objectively. Go to the property at different times of the day and during the week. Walk around and think about what you would change about it, what you like the most, and what is most important to you in your home.
If you can look at the property objectively, you will be able to compare and contrast the different things that you like without getting caught up in the fact that this one has more around the back or that one has a bigger kitchen. There is a lot to take in when looking at properties, so the most important thing to remember is to take your time and not rush your decision.
4. Shopping for a House Before a Mortgage
When most people see the home of their dreams, they immediately want to go out and find a mortgage. Unfortunately, the housing market in the UK is very competitive, and it’s essential that you have the right mortgage before you start shopping. Mortgage lenders will look at your income and your credit history, which means that if you get a mortgage before you find a home, it may be difficult to find a lender that will give you the mortgage you need.
5. Being Careless With Credit
When you’re shopping for a home, it’s important to look at your credit history. A down payment of at least 10% is required on a home, and it may be difficult to get a mortgage if you don’t have a strong credit history. Before you apply for any credit, it’s important that you check your credit score and pay close attention to your credit report. You should also look at your credit score to see exactly where you stand. If you have any negative marks, it’s important to get them removed or at least cleared up.
Conclusion
It’s important to remember that buying your first home can be a scary process, and it’s easy to get caught up in the excitement and lose track of the important things. The five common first-time homebuyer mistakes listed above are easy to make and can end up costing you thousands of pounds. To avoid the mistakes, you should always make sure that you do your research, look at your options and make an informed decision, and take your time when shopping for your home.
Finding the right mortgage that fits your needs and budget is crucial for anyone planning to buy a home. That’s why you need a reliable mortgage broker like A Move Brokers. Our team of professional mortgage advisers in Chester will help you find the perfect loan for you. Partner with us today, and let’s turn that dream home into a reality.
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.