Getting a mortgage when you’re a first time buyer is tough. Changes to the lending criteria following the economic crash in 2008 has made it hard for first time buyers to secure a mortgage, and has called upon them for very large deposits too.
Figures from Halifax suggest that the average deposit has now risen to around £33,000, 13 per cent higher than the average last year. The number of first time buyers has decreased slightly too, despite schemes like the governments ‘Help to Buy’ which specifically targets this group of buyers.
If you’re looking to get your foot on the first rung of the property ladder, you should make sure you’re well prepared for what’s to come. Here are some of the most common mistakes made by first time buyers, and what you can do to avoid them.
- You didn’t check your credit report
Having a good credit score will open the door to many more mortgage offers and deals. Find yours out by getting a copy of your report, and ensuring everything on these is factually correct. More on credit scores here.
- You’ve made an offer without an agreement in principle
You may well have found your dream home, but without an agreement in principle from your mortgage provider, there’s no point in making an offer. Get your mortgage sorted first, and ask your lender for an ‘agreement in principle’ which will give you the confidence and the backing to really leverage your offer.
- You bought a flat with a short lease
If you’re buying a leasehold flat, you could be in trouble if the lease is shorter than 80 years. You may struggle to get a mortgage and, if you do get one, you may struggle to sell the property later on. Try and get the lease extended before purchase, and if you can’t or the seller won’t do this, negotiate your offer in lieu of the short lease.
- You didn’t realise how expensive this would be
There are all sorts of costs, fees and charges associated with buying a house, so don’t assume that all you need to worry about is the deposit. From stamp duty to legal fees, it all adds up. Take some time to figure out all the associated costs of moving to get a clearer idea on what you need to pay.
- You chose the wrong mortgage
With so many mortgages to choose from, it can be difficult to know if you’re getting the best deal or not. Often the variable rates seem cheaper on the surface than a fixed rate offer, but remember you’ll end up making much higher payments when interest rates rise again. Make sure you’ve compared all the offers available to you, and that you understand how different types of mortgages work. In short do your research and if you are unsure then take advice.
Getting a mortgage as a first-time buyer shouldn’t be a complete nightmare. With some forward planning and awareness of the pitfalls, you should be able to get a good deal.
However if you need some help speak to a mortgage broker or financial advisor. We can help you get in better financial shape to get the best deals, and also have access to mortgage products that are not easy to find on the high street or online.
Give me a call if you would like to chat about your options.