Securing your first home isn’t always the most straightforward process, and there are many factors that determine when the right time to buy your first home is. Ensuring you are in the strongest financial position possible is vital to getting the best mortgage deal, as lenders will want to be sure you can afford your monthly repayments.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, offers his top tips to prepare potential first time buyers for the home buying process.
Work out what you can afford
When you are in the process of purchasing a property, your financial strength and stability will act as a ‘make or break’ in the mortgage application process. Knowing your income and outgoings will be key to determining what you’ll be able to afford and will also help you work out how much you need to save. To work out what your monthly repayments on your mortgage might be, a mortgage repayment calculator can help. A mortgage adviser can also help in assessing your affordability.
Once you have this information, you will be able to start searching for your property and create a realistic budget to help make your savings journey as smooth as possible.
Create a budget
It is much easier to judge your disposable income if you know exactly what your outgoings are and when they are paid for. Using a Budget Calculator Tool can be helpful in organising your monthly income and outgoings and can help you look at where to possibly cut costs. If you cannot reduce them further, you can try to plan your monthly savings around your newly organised finances.
Consider your priorities and save what you can
Saving doesn’t need to be daunting, and it doesn’t mean you have to save large sums of money every month. Depending on how quickly you want to reach your end goal, you may choose to temporarily cut out some luxuries such as holidays and meals out, putting whatever you can towards your savings target. The key is to get the balance right for you and make your saving plan one that you can sustain.
To support first time buyers with their home buying journey, Mortgage Advice Bureau created the Home Buying App. This provides useful tips on the home buying process, as well as a checklist to help you stay on track with your buying journey. You can also set up a savings goal through the app, which will prompt you on the amount you’ll need to put aside each month for a deposit to reach your goal within your chosen timeframe.
Take advantage of the First Homes scheme
The First Homes scheme offers 30% discounted house prices to potential first time buyers and key workers in England. Designed to help first time buyers purchase homes in their local area, the 30% discount could help to pay towards things such as surveyor fees, removal costs or furnishings. In order to be eligible for the scheme, you must meet the following criteria:
Be 18 or older
Be a first time buyer
Have a minimum deposit of 5% of the discounted price and no more than 50%
Have a combined household income less than £80,000 (or £90,000 if you live in London)
After the discount has been taken off, the home must cost less than £420,000 in London, or £250,000 anywhere else in England.
Improve your credit score
When you apply for a mortgage, a lender will look at your credit rating to decide whether to lend to you, how much to lend, and sometimes how much interest to charge.
Key actions that will help boost your credit score include not missing repayments on any current lines of credit, ensuring you’re using credit cards responsibly, getting on the electoral roll and paying monthly bills on time.
There are three main credit agencies that hold credit reports on you: Experian, Equifax and TransUnion. It’s a good idea to check all three reports and go through them carefully to ensure all information is up-to-date and get any mistakes corrected as soon as possible.
