Getting a mortgage to buy your first home is exciting, but not knowing the ins and outs of what getting a mortgage will entail can turn the process into a daunting task. It doesn’t have to be that way. Here’s a comprehensive guide to help you get started.
Start with a budget
Before you start looking for a mortgage, it’s important to know how much you can afford to borrow. This will depend on your income, expenses, and credit score.
You can use our budget planner to get an idea of how much you can borrow and what your monthly payments could be based on your current finances. This’ll give you an estimate of what you could afford.
Choosing a lender
When picking a lender, you should explore your options. Different lenders will offer different rates with some lenders offering preferential rates and cashback for first time buyers only, so it’s important to look at everything being offered to you.
Our trusted partner Embrace Financial Services will check with over 70 trusted lenders to find a full range of mortgage deals suited to you and your budget. It’ll take their advisers just 15 minutes to find you real mortgage options and offer you a Mortgage in Principle at the same time.
Getting your deposit together
When taking out a mortgage you will need to put down a deposit. The amount your deposit will be depends on the price of the property you want to buy, and what type of mortgage you end up choosing.
Usually, you will need to put down at least 5% of the property’s price as a deposit, but it is up to the lender how much of a deposit they will ask from you.
If you can afford to put down more than the amount asked of you, you could be able to get cheaper monthly repayments, a better rate, and a higher chance of being accepted.
Currently the government has a mortgage guarantee scheme in place for first time buyers. It was first introduced in 2021 and has been extended to 2025.
The scheme guarantees first time buyers 95% loan to value on properties worth up to £600,000, meaning you’d only need a 5% deposit to secure a mortgage.
It also protects the lender by compensating them if you can’t pay, encouraging lenders to take on first time buyers. If you don’t have the time to search for lenders, rest assured that you’ve explored your options with an appointment with our partner Embrace Financial Services.
Taking advantage of government schemes
You should consider taking advantage of the government’s mortgage guarantee scheme as previously mentioned, but there are also other schemes that could help you get on the property ladder.
First Homes scheme
The first homes scheme is aimed at enabling first time buyers to buy a property for 30% to 50% less than its market value. The property must either be a new home build by a developer, or a property that had previously been bought through the scheme.
Check the government’s webpage to see if you’re eligible to make the most of this scheme. New build homes provide numerous conveniences for first time buyers, so capitalising on this scheme would be ideal if a new build home is what you’re looking for.
Shared ownership
If you’re unable to afford the deposit and mortgage payments for a property that suits you, you may be able to purchase a share of the home’s market value and then pay rent to the landlord on the share they still own.
With shared ownership you can buy a new build home, an existing home through the shared ownership resale scheme or a property that meets your specific needs, such as accessibility requirements if you have a long-term disability.
Find out more on the government website to see if you and the property you are interested in could work for this scheme.
Lifetime Individual Savings Account (ISA)
With a lifetime ISA you can save for your first home. You can deposit up to £4,000 each year until you’re 50, but you must make your first payment before you’re 40. The government will then add a 25% bonus to your savings, meaning you could make up to a maximum of £1,000 per year.
You can withdraw money from your ISA if you’re buying your first home if the property is less than £450,000. It’s a great way to save up for your first property, but also functions as a savings pot for once you reach retirement.
As a first time buyer there is a lot to consider, but don’t let the process intimidate you. You have lots of options to make getting onto the property ladder easier. Start by figuring out what you can afford and how you could take advantage of the government schemes.
Book your first appointment today to start planning your future, appointments can be over the phone, face to face or via video call, or you can request a callback at a time that suits you.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
Please be aware that the information provided within these archives has been pre-published, as of the date published on each article. The information contained within, including references to taxation, legislation, regulation, or any other issues or concerns may no longer apply.
Your Move E-Marketing Executive
