First Time Buyers

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First Time Buyers

Talking all about First Time Buyers with Ross from Whitemark Mortgages.

How is the mortgage process different for First Time Buyers?

There’s not much difference whether you’re a First Time Buyers or a home mover, and whether this is your first or your tenth house. The big one, though, is that you haven’t got a property to sell, so you’re not stuck in a chain. That means things generally can move a little bit quicker.

Some lenders have specific products aimed at First Time Buyers, which could give you slightly more competitive rates. Sometimes they offer cash back paid on completion.

Another difference is stamp duty – this can be different for a First Time Buyer to a home mover. Governments are always tinkering with the rules, as I’m sure you’ve seen, depending on the economy at the time and what’s happening in the world.

What is an Agreement in Principle?

An Agreement in Principle is where a lender will run a soft credit check on you after we input all your information. We let them know your income, your outgoings, any loans you have, credit cards… that type of thing. They then give you an outline of what they’d be willing to lend you, subject to full underwriting.

It gives you a document which you can show to an estate agent, confirming how much a bank is prepared to lend you. It gives you a bit of peace of mind to know that once your offer is accepted you’ve got a good chance of securing the mortgage.

How much can a First Time Buyer borrow and what sort of deposit is needed?

It does vary, but if you’ve got anywhere between a 10% and 20% deposit you’re in good stead. The greater the deposit you put down, generally the more competitive the rates.

Sometimes lenders do come up with 5% deposits, but that does depend on market conditions at the time.

How do I know what my credit score is? How do I improve it?

It’s easy to get hold of your credit report online. Before we submit any paperwork to the lender we will go through your credit report with you. That will highlight if there’s been any issues you are unaware of – it would also give us up-to-date balances on any loans or credit cards.

If you do have a bad score, it doesn’t necessarily stop you from obtaining a mortgage. It might just impact the choice of lenders available to you.

To improve your score, make sure your addresses are up to date and that you’re on the voter’s roll at your current address. That’s very important. Try not to utilise all the available credit to you. All those things can help.

Sometimes not enough of a credit record can be an issue. That’s something we can discuss once we’ve had a look at your report with you.

Speak To an Expert

Even if you’re just started the process or you’re just thinking about moving or buying a home, it’s worth giving us a call. We’ll give you an idea of what you can borrow and what everything will cost. You can put a plan in place if you’re not quite there yet.

What help or schemes are available for First Time Buyers?

The government is always tinkering with property schemes and there are lots of options. You can have some form of Joint Borrower Guarantor mortgage where perhaps a parent would go on the mortgage with you. You can use their income to boost your affordability, but they wouldn’t necessarily join you on the property deeds.

There’s also shared ownership where you would perhaps own 40% of the property and a local housing association would own the remaining share. You would pay rent on the remaining share. That’s a good scheme that has been around for a number of years now – it probably isn’t going to go anywhere.

What fees are involved when buying your first home?

The biggest one is normally stamp duty, which depends on the purchase price of your house. But as a First Time Buyer you normally pay lower levels than a home mover. It does change often. At the moment [podcast recorded in May 2023] the first £300,000 is free from stamp duty.

You also have mortgage arrangement fees from a lender. They can range between £200 to £1,500, depending on the lender and the rates available. You’ve got legal fees to pay to your solicitor with local authority searches paid on top of this, also through your solicitor.

Survey fees again depend on the purchase price or the house and the type of survey you choose.

How can a mortgage broker help if you are a First Time Buyer?

What we really do is help you understand the process, because it can be a bit daunting if you’ve never done this before. There’s a lot of jargon to understand, lots of rules and lots of lenders. We can really hold your hand throughout the process.

We’ll advise on all the different types of mortgages available, from fixed to discounted to trackers. We explain the effects of different terms on your repayments and give you an idea of the costs involved, including solicitors fees, stamp duty and surveys.

We’ll support you throughout the process and give you an idea of what you can borrow. That way, you will feel confident in house hunting.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.