How to Get a Mortgage for First Time Buyers

Getting ready to purchase a home for the first time can be a great adventure. In all the excitement, you may assume you know how to get a mortgage as a first time buyer. However, it can be a complicated process with many different options available. With a little extra knowledge, you can ensure you make the right choices when purchasing a property. Here, we take a look at how to get a mortgage UK first time buyers can be happy with.

Firstly, What is A First Time Buyer?

Before diving into the world of mortgages, it is important to understand what defines a first time buyer. You will be considered a first time buyer if you have not previously owned any residential property. This means you cannot own (or have owned at any time) a home in the UK or overseas. You may own a commercial property, as long as there is no accommodation attached to this property.

However, you will not be considered a first time buyer if you are making the purchase with another person who owns or has owned a residential property. This is also the case if you have inherited property, or if your home is being bought for you by a homeowner (for example, if your parents are making the purchase for you).

How Much Deposit Will I Need?

So, how does a mortgage work for first time buyers? As a first time buyer, it is generally true that you will need to have a deposit of 10% of the price of the property you are looking to buy. This deposit is used in order for lenders to see that you have the financial security to be able to repay your mortgage. In some cases, you can make a 5% deposit – though 10% is much more common.

The more that you are able to save up for your deposit, the more of your home you will own outright and the less you will need to pay back. This will mean you might be able to pay off your mortgage more quickly or enjoy cheaper repayments and potentially lower rates.

A happy young couple using a laptop

How Much Can First Time Buyers Borrow?

You will need to consider several factors when understanding how much you are able to borrow as a first time buyer. The amount that your mortgage lender will offer is going to depend on how much you can reasonably be expected to repay every month. They make this decision by looking at your credit history and current credit score, as well as your usual outgoings. Of course, the amount of deposit you have been able to save will also play a role, and you can also expect for your salary and overall income to be important.

Once your mortgage lender has looked at all your financial information, they will inform you of how much you will be able to afford and tailor your mortgage to meet this.

At this point, it is vital to think about any outside factors that might impact your repayments – such as fluctuating interest rates. It is always better to borrow an amount that will be highly achievable for you, not one that you can only just afford.

Tips for First Time Buyers

How can you enjoy the best chance of getting the mortgage you need? Below, we cover some helpful mortgage tips for first time buyers:

Improve Your Credit Score

Your credit score plays a big role in your mortgage, so ensure that you have done everything possible to improve your credit score ahead of time. This can be achieved through small actions such as proving your address, always making your repayments on time (for credit cards and payment plans), and having a history of borrowing and paying back successfully.

Counting money and using a calculator

Save as Much as You Can for a Deposit

As we mentioned, purchasing a property for the first time is exciting – but it is best to take your time while saving. A larger deposit will mean you may be offered a higher amount for your mortgage or need to pay less off over several years.

Consider Government Schemes

Government schemes to support first time buyers can be extremely beneficial. For example, “Help to Buy” provides first time buyers with 20% of the overall price of a new-build residential property. The buyer only needs a 5% cash deposit. Other schemes such as “Right to buy” gives rental tenants a chance to purchase government-owned housing they live in, while “Shared ownership” lets you buy a home for a lower rate which is co-owned with a local council.

Work With a Mortgage Broker

Working with a mortgage broker can be a great way to understand how to get a mortgage first time buyers can realistically afford. A skilled and experienced mortgage broker like 94 Mortgages can connect you with many different options, finding the best terms for you.

With these tips and the right professional support, you should be able to find your ideal mortgage option and get a foot on the property ladder as a first time buyer.

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