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A Guide for First Time Buyers

Posted by Jamie on January 1, 2023

Use a Help to Buy ISA or Lifetime ISA

If you have an existing help to buy ISA or a Lifetime ISA (the lifetime ISA replaced the Help to Buy ISA in 2019) make sure you maximise this. You receive a 25% bonus on all money invested in the account and you aren’t going to get 25% interest anywhere else. ITS FREE MONEY! This will help you speed up the saving of your deposit. Up can save a maximum of £4,000 per year so that’s a bonus of £1,000 per year just for saving as you normally would!

Aim to save 10% if possible

Although 5% is the minimum deposit possible for a residential purchase, not all lenders offer mortgage products suited to a 5% deposit. All lenders however offer a 10% deposit option. So by aiming for a 10% deposit your options will be wide open, allowing you to choose the most competitive option from a wide range. You will also secure a lower interest on a smaller mortgage saving you £100s if not £1000s on your mortgage over time. Also if you do fall short of 10%, you will still achieve a 5% deposit which will still allow you to buy a home.

Keep on top of your credit report

Having a 999 credit score isn’t essential, but a clear report is. Make sure the information the credit report company has for you is correct and that there are no fraudulent transactions on your report that you didn’t know about. This could be things like making sure the address and date of birth they have for you is correct. Something as small as that can cause an application to be declined. Also if there are any defaults or CCJs that have been enforced which are not your fault, you can contest these and have these removed.

Use an independent mortgage adviser

As every lender and their criteria is different, using an independent mortgage adviser can search the whole market to find the best deal to suit your needs. Being declined by your bank doesn’t signal the end of your chances of getting a mortgage, it could just be a case that you don’t match their criteria. Just like trying to fit a square peg into a round hole. An independent adviser can help to navigate the best fit for you and hold your hand throughout the entire journey.

Secure a mortgage in principle

Before viewing properties and making an offer on your dream home you should secure a mortgage in principle first. This is thee document that estate agents will request when you make your offer to prove you have been pre approved by a lender for the mortgage needed to buy a property of that value. Not only will this document give you peace of mind that you have been pre approved by a lender, it will also help you to determine your maximum purchase price too as your adviser will help you determine your maximum mortgage based on your income and outgoings.

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