How to Secure Your First-Time Buyer Mortgage
Getting your first-time buyer mortgage can involve numerous steps, from understanding how much you can borrow to exploring the various product options available to newcomers in the property market.
This guide is designed to simplify your journey, offering a structured path to securing your first-time buyer mortgage and turning your dream of owning a home into a reality.
Step 1: Understanding Your Eligibility and Advantages as a First-Time Buyer
As a first-time buyer, you might wonder whether obtaining a mortgage is simpler or more complex for you. The answer lies somewhere in between. While you might not have the experience of going through the mortgage process, you benefit from various programs designed to facilitate your entry into the housing market. These include lower deposit requirements and government incentives aimed at easing the financial burden of purchasing your first home. However, challenges may arise, especially in proving creditworthiness and income stability, which can be particularly daunting for those with limited credit history or who are self-employed.
Step 2: Exploring Mortgage Options with High Street Banks
Yes, as a first-time buyer, you can secure mortgages from high street banks, which often offer products specifically designed for you. These products may include features such as lower deposit requirements and enhanced affordability checks to cater to your unique financial situations. It’s important for you to research and compare the various offerings from different banks, as eligibility criteria and the terms of the mortgages can vary significantly.
Step 3: Navigating Stamp Duty and Deposits
A key advantage for you as a first-time buyer is the potential for reduced stamp duty rates or even exemptions, which can make a significant difference in the affordability of a home purchase. To understand your obligations, using a Stamp Duty Calculator can provide clarity on what you might expect to pay.
When it comes to deposits, the minimum amount typically starts at 5% of the property price for a mortgage. However, the more you can afford to put down, the better your mortgage options might be, including potentially lower interest rates and monthly payments.
Find out Your Options
Step 4: Calculating Borrowing Potential and Selecting a Mortgage Term
Lenders generally offer to lend around 4 to 5.5 times your annual income, but this is assessed against your overall financial situation. It’s crucial for you not just to consider how much you can borrow, but also what you can comfortably afford to repay, factoring in other homeownership costs. Tools like mortgage calculators can be invaluable in establishing a ballpark figure for your borrowing capacity. You can use our residential calculators for a guide on affordability, the cost of your mortgage payments and how much you can borrow.
Deciding on the mortgage term is another critical decision for you. Terms can range significantly, and the right choice will depend on factors such as your age, financial goals, and whether you prefer lower monthly costs or a focus on reducing the overall interest paid over time.
Step 5: Assessing Mortgage Types and Special Programs
For you as a first-time buyer, understanding the different types of mortgages available can open doors to homeownership that may otherwise seem closed. Options such as Shared Ownership, Joint Borrower Sole Proprietor mortgages, and Guarantor mortgages each have unique benefits that can cater to different financial situations and goals.
Joint Borrower Sole Proprietor Mortgages
Joint Borrower, Sole Proprietor is a type of mortgage where not all parties to the mortgage are legal owners of the property. For example, if there are two borrowers in the scenario both will be mortgage borrowers, but only one will be named as owner of the property.
Shared Ownership
Shared Ownership is a government scheme that offers you the chance to buy a share of a property from a housing association, a non-profit-making body that provides homes. Because you only own a part of the property, you can buy it with a smaller deposit and mortgage. A smaller mortgage means smaller repayments but you’ll also need to pay rent, monthly service charges and ground rent.
To be eligible for Shared Ownership you need to be a first-time buyer, an existing shared ownership homeowner, or a former homeowner who cannot afford to buy now, over 18 and have an annual household income of less than £80,000 (£90,000 in London).
Step 6: The Importance of Professional Advice
While it’s possible to navigate the mortgage application process on your own, working with an experienced mortgage broker like Kerr & Watson can offer significant advantages. Brokers like us have in-depth knowledge of the market and can help identify the best deals suited to your unique circumstances, increasing the likelihood of application acceptance and securing the best terms.
Step 7: The Property Purchase Timeline
The process typically takes between three to six months depending on the lender, solicitor and vendor, the process includes critical stages like mortgage application, mortgage offer, exchange and completion.
Avoiding Common First-Time Buyer Mistakes
When securing your first mortgage, be mindful of a few common pitfalls. One mistake is underestimating additional costs – remember to budget for Stamp Duty (if applicable), solicitor fees, surveys, and moving expenses so they don’t catch you by surprise. Another common error is assuming you need a huge deposit before you can buy; in reality, there are 5% deposit mortgages available (see our First-Time Buyer 95% LTV Mortgages guide). Waiting years to save a 20% deposit might not be necessary if you qualify for a 95% LTV mortgage, getting on the ladder sooner means you start building equity earlier.
It’s also wise to check your credit report well in advance and avoid taking on new debts before applying. Finally, don’t go it alone if you’re unsure: consulting a first-time buyer mortgage advisor can reveal options and lender deals you might miss on your own, setting you up for success.
Your Path to Homeownership
Securing a mortgage as a first-time buyer involves a series of thoughtful steps, from understanding your eligibility and advantages to selecting the right mortgage product and navigating the application process.
By taking a structured approach and seeking professional advice, the journey can be smoother and you can make more informed decisions that pave the way to homeownership.
Speak to an Expert Mortgage Advisor
If you’re a first time buyer, this page should reassure you that mortgage options are available. Our team has access to a variety of high street banks and niche providers specialising in first time buyers. Contact us at 01252 224620 or email info@kerrandwatson.co.uk.
