Owning your first home can be quite the challenge no matter how old you are. At times, frustration can take over but, where there’s a will, there’s a way. Below are our best steps to help you get your foot in the door and onto the property ladder.
1. Start Saving
The very first thing to do is to monitor your spending and understand what you want, more than what you need, in order to make cutbacks and save money. Then you should start to consider either a Help to Buy scheme or a Lifetime ISA.
With a Help to Buy ISA, the Government will boost your savings by 25%. This means that for every £200 you save, you receive a government bonus of £50. Th maximum you will receive is £3000.
You can use a Lifetime ISA to save for later life as well as to buy your first home. You can put up to £4000 away each year right up until you turn 50. Each year, the government will add a 25% bonus to your savings which can be up to £1000. More information can be found on the HM Government website.
2. Know the Score
Before getting a mortgage, your credit score will be checked, so you need to know how good your rating is and whether the information on your file is correct and up to date. If you have any outstanding payments or debt due, then now is the time to get it sorted.
This also applies in terms of overdrafts – if you can’t pay it then think about a 0% money transfer card or structured loan so it can be cleared.
With credit cards, try to get your balance as low as possible, ideally below 30% of your credit limit. Aim to pay off at least 10% of the outstanding balance, monthly.
As well as bettering your chances of getting a mortgage, having a good credit rating means you will be offered the best mortgage rates.
3. Find the right mortgage
Mortgage deals fall into two broad categories – variable rate and fixed rate.
Many first-time buyers favour fixed rates as it allows them to budget with no worry for fluctuation rates. Fixed rates are usually applied for 2-5 years, some lenders may offer 10 years or more, so it is important you think about future circumstances before accepting long term fixed rates. Be aware that the interest rates on fix rate mortgages tend to be slightly higher as you are paying for security and peace of mind.
Variable rates can change at any point and there are three types: Standard Variable Rates, tracker mortgages and a discounted rate. Delve deep when researching to understand the best mortgages that are available for you.
For many first-time buyers, taking the first step onto the property ladder can be both daunting and confusing. After a lot of research into what is best for you and an appropriate saving method, we hope you will be on your way to buying your first property where you can then contact us here.