I’m a First Time Buyer – How on Earth Do I Buy a House?

Oct 30, 2020
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Financial advisors and Accountants North Wales deal with many people who are thinking of buying a house for the first time, they’ve helped us write this helpful guide.

First Time Buyer Mortgage

Well first things first, what’s a first-time buyer mortgage by definition? First-time buyer mortgage is specifically designed for people who are new to the housing market. Some companies use incentives such as cashback schemes to entice you to get a mortgage with them. They may also offer 95% or 100% mortgages. These only require a 5% deposit (or even none at all). However, you should remember that you need to fit strict affordability criteria to get approved for this.


When’s a good time to buy my first property?


Well, there’s a good deal of personal and financial commitment involved in buying a first home, so it’s important to have that stability in your life. For example, it’s usually better to be in a permanent job with a steady income to show companies that you’re more likely to be able to meet monthly mortgage repayment. Remember that if you can’t keep up with mortgage repayments then you may lose your home. As accountants North Wales will tell you, getting a mortgage when you’re self-employed can be a lot harder. Since your income may be unpredictable. Lenders quite often like to see that you’ve been living at a long-term, permanent address. You can use your parents’ address if you’ve been staying in a student housing or other temporary accommodation. Make sure that you’re’ registered on an electoral roll with it.

It can also be beneficial to build up a good credit history. If you don’t have much in the way of credit history it can be difficult for companies to assess the likelihood of paying them back – and so they may refuse you a mortgage.

Finally, the economic climate may affect your decision, as this can impact house prices and mortgage interest rates. If you buy the property before a dip in property prices, you could be unfortunate enough to get into negative equity,. This is when you owe more money on your mortgage than the current value of your house – making it very difficult to move home again.


How much do I need as a deposit

A deposit is a lump sum you pay towards is the price of a property when you buy it. It’s usually expressed as a percentage of a property price, eg. £20,000 deposit on a property that costs £200,000 would be a 10% deposit.


So how much do you need as a first-time buyer?

there is unfortunately no such thing as one-size -fits all when it comes to this, it depends massively on a variation of difficult issues – including but not limited to your financial situation, the cost of a property, lenders criteria and your credit score.

If you slice it right, you may be able to secure a mortgage with just 5% deposit or very rarely no deposit at all. These are called 95% or 100% mortgages. These totally comes with higher interest rates or require a guarantor to reduce the risk for the lender.
A larger deposit, usually means that smaller monthly payments and lower interest rates are worth bearing in mind when deciding what property you can afford.


How much will my mortgages be a month?

Well for first time buyers, mortgages are repayment mortgages rather than interest-only mortgages. So you’ll pay back part of what you owe each month plus interes. The size of your regular payments will depend on the mortgages’ interest rate – this is calculated as a percentage of what you owe. Iut may change over time or if you have a variable or tracker rate.
How much you borrowed. The more you borrowed, the more you’ll pay each month. That’s why putting down a bigger deposit can help reduce your regular repayments. The mortgage term, this is how long you’ll be paying a mortgage for, stretching a repayment over more years will decrease the amount you pay each month. Although you’ll then end up paying more interest over all.


What help is Available?

Thankfully, due to some great government schemes. If you’re saving for a deposit , you can make use of a help-to-buy ISA or a lifetime ISA (International Savings Account). As you build savings in these accounts, the government will top up savingings in these accounts which helps you to reach your target sooner. Just remember – read terms and conditions carefully,, using a help to buy isa for a deposit can be tricky and may require some careful negotiation with a solicitor.


The Help to Buy ISA will give you 25% of any money that you can save in the account.

Under the government’s help to buy scheme you can also get an equity loan to buy a new-build house. This method can help reduce monthly repayments which helps you buy a more expensive home than you could afford otherwise afford. You’ll need to start paying back the loan after five years.
Finally you should consider shared ownership. This allows you to buy a share of a property (usually between 25% and 75% of the property and pay rent on a remaining share.


Can I afford a Mortgage?

Already browsing homes for sale? Before you get attached to a country manor, a modern city flat or a cool lighthouse with views it important to get a grasp on what your budget is/ Review All your information : savings, income and expenditures work out how much you can afford for a deposit and monthly payments, getting a decision in principle or agreement in principle from a direct lender or mortgage broker can help you devise a property budget but remember this doesn’t guarantee you a mortgage. Also consider how your financial lifestyle circumstances may change in the future and how a variable interest rate mortgage could suddenly increase. And so it’s best if you can afford a bit more than what you can get.
Remember that you must repay your mortgage on time and in full or you may lose your home.

A home can have a multitude of costs associated with it. – including taxes, legal and valuation fees, stamp duty and removal costs. As well as more optional costs like decorating and buying furniture.


Can I get a Buy-to-Let Mortgage as a first-time buyer?

Here’s the trick, get a mortgage you must convince lenders that if you’re low enough risk, there are several way as you may be able to improve your chances of acceptance.

  • Putting down a decent deposit eg. by saving up, getting help from a relative or using a Help-to-Buy scheme.
  • Using a guarantor – this is someone who promises to make your payments if you can’t.
  • Showing you’ve handled credit responsibility in the past – find out how your credit score may affect your mortgage eligibility.
  • Showing you are capable of comfortably making the monthly repayments – eg. by only applying for a mortgage eligibility.
  • Showing you’re capable of comfortably making the monthly repayments by only applying for a mortgage you can afford, boosting your income or reducing how much you spend.
  • Applying with correct and up to date information – this helps the lender assess your affordability accurately.
  • How do I Prove that I can Afford a Mortgage.You will be asked questions like
  • How much do you earn?
  • How much do you regularly spend
  • Your other debts and financial commitments(credit cards and loans).
  • Your savings.

What should I do when I get a First-Time buyer mortgage?

A mortgage is a step up in responsibility from renting or living at home
It’s vital you keep up with repayments -or you could lose your home and damage your credit report.
Making full payments on time should boost your credit score over time, while late payments cna damage it – remember to budget for the ongoing costs of owning a property such as a repairs maintenance, ground rent, council tax and utility bills.

Talk with accountants North Wales to give you some financial advice on this area.

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