Have you noticed that many young adults who never dreamt of buying a home are now doing just that? With help from Chancellor Rishi Sunak’s Stamp Duty Tax holiday and the extension to the Help to Buy scheme, many people who thought that they’d be renting for the rest of their lives are now able to get enough funds together for a mortgage deposit. For those of you looking to buy you first home, the team at Houso would like to offer you some tips that will help you get onto the property ladder.
Firstly, we suggest that you get an idea of how much your preferred home may cost and how much money you will need. Make sure that you do your research, there’s nothing worse than falling in love with a home or area that is out of your reach financially. Try not to rush into anything, it could take you a few months or even over a year to find your perfect property. The transaction could take a while, too. Buying a home is a big financial commitment, so be patient!
If you are eligible for Help to Buy, you may be able to obtain a mortgage for as little as a 5% deposit. If you are not eligible, then you will sadly need to save more money. There are currently a few help schemes available, visit the UK government website to find out more. The amount of money that you save must include moving costs and other fees such as solicitor fees. A mortgage advisor can look at your wages, your debts, and your deposit to make an assessment – they may be able to offer you a rounded figure including all the necessary additional fees.
Raising money can be daunting, but the sooner you start, the sooner you’ll get together your deposit. You might have to calm down on stuff like takeaways and nights out! If you live sensibly, you will be surprised how quickly you can save. For those of you who aren’t very good at saving money, it would be wise to investigate opening an ISA. However, do not despair at the struggle of saving huge amounts of money, as your first home will probably not be your dream property. Consider starting small so that you can get a foothold on the property ladder. We all must start somewhere!
To qualify for a mortgage, you will need to prove that you have a regular income at a stable job. You may also need to pay off as much debt as possible before you can obtain a mortgage. A mortgage lender will be able to check your credit score and will ask about any unsecured debt repayments such as credit cards and loans. Banks and building societies do this so that they can determine if they want to lend to you. They will probably access your credit score through websites like Experian or Equifax. Before going to a lender, you can access your credit score yourself on similar free websites. Check if any errors are hampering your score and see how you can improve it by paying your outstanding debts. We advise that you register to vote as it is hard to obtain credit if you are not listed on the electoral roll.
Due to Covid -19 the lending criteria for first time buyers is more onerous that it was, for example flats are harder, deposit amounts have been raised, the lenders have to factor a dropping market, so they are ensuring that what the do lend upon is robust enough with your financial contribution and the asset type to ensure that should there be a dip in the market then the chances of negative equity is reduced.
If you get a moment, have a look at the properties for sale on the Houso App. Get an idea about how much money you may need to save and start the ball rolling. Good luck guys!