Money Advice

Get expert debt advice today

Call Us Free 03301224614

Opening Hours: Mon – Fri 8.30AM – 8PM

first time home buyer

First-time home buyer guide – Money Advice Service

Buying a place of your own is indeed a hassle prone and there are many aspects associated with it. You have to take into consideration many kinds of expenditure and plan each step. Apart from this, many other things will keep you occupied. You would surely need some help to get through the process if it’s your first time. Even though it’s a little complicated, it’s not that difficult to get a complete understanding of the situation. 

In addition to that, you’re also going to need some plans about how you’re going to make the purchase. First-time Home buyers have a lot of options available exclusively for them.

Recommended Service: Finalcial Advisor UK

Would you be considered as being a first-time home buyer?

Even though the term is simple, who it applies to might be a little complicated to you. The first condition, of course, is that this must be your first time buying. In addition to that, you also shouldn’t have owned a place to live. If you did, you wouldn’t be considered as someone who is purchasing for the first time. You might find this strange but this is what the regulations say. So, you wouldn’t be able to avail any benefits even if you’ve inherited a home, but buying one for the first time.

What options are there for you?

There are many ways through which you can proceed with your plans. As a first-time home buyer, not everyone gets the same number and kind of options that are available to you. Now, as you might know, a mortgage is the most common way to fulfil your plans, though this is not the only one. 

There are different housing schemes as well that are run by the government. Even though the help-to-buy is not available any more for new applicants, there are other schemes. So, there’s no lack of options for you. Now, you just have to prepare an accurate budget and move ahead with the plan.

How much do you need for a mortgage?

There is no denying that purchasing items in instalments would be the easiest way. But, you need to save a specific amount even for that purpose. To calculate that, you have to consider the cost of the property first. Whatever the amount is, you are recommended to save at least 10% of that amount. The utmost amount that you require is 20% if it’s possible. As you shall see, the more you save the better the deal you’ll be able to get.

How do you save money for this purpose?

Rather than making any delays, you must start saving, if you want to move ahead with your plan sooner. For that, you have to cut any expenses that you do not need immediately. You can even consider using public transport instead of your private one. If you’re living in a rented place, consider saving the expenditure by moving in with a partner, to share the rent. 

You can also save quite a lot simply by choosing what you buy, choose wisely while shopping. In short, you always need to keep a plan in mind while making any expenditure. Lastly, you must also try to ask your family for help in this matter, if need be.

Now, you might wonder what to do about the fact that you have to put a tax on savings. You’d surely like to find a way to avoid paying it by legal means. In that case, there is a way. With an individual savings account (ISA), you can save a good amount of money without having to pay any tax on it.

How do you prepare a budget that suits your plan?

When you are buying a place to live, there are multiple costs that you might have to consider. In case it’s a piece of land, you’d have to get it surveyed. In addition to that, you also have to take care of the insurance papers associated with the building. 

Needless to say, you also have to take into account the expenses for furnishing your new place. Then, there’s also the cost of moving all your belongings there. If some taxes apply to you on the value of the property, you have to add them too. Also, you would need a solicitor to deal with the legal matters, and that would require a good amount of expense.

You must take all these and any other costs into consideration while making a budget. As a first -time buyer, you would surely do better with some help. For that, you must consider getting a financial advisor. All you have to do is consider many options and choose the best one that you can find. Since you probably have to pay for this, you might want to take this cost into account as well.

How to get the best interest rates on a mortgage?

To be able to return the money as easily as possible, you’d want the rates to be as low as possible. You might wonder if that’s in your hands or you must leave that in good faith. 

In that case, what if you’re told that you can help yourself to get the best rates? You can make that possible by following these first-time home buyer tips:

  • Save as much as you can

Want to get the best possible rates? Show the lender that you can pay them quite a good instalment amount. This can impact the rates at which they offer you the loan. The more money you have, the less they’ll find it risky to lend you money. That is the key to get the best rate.

  • Work on improving your credit records

Does your credit file show past difficulties in repaying debtors? In that case, it doesn’t need to be mentioned that the lender will feel high risk. If it shows things like Insolvency or Bankruptcy, that would be the worst. In case you had no idea, you have to tell them about these two things even after they no longer show in the file. In some cases, you might have to look for other options. However, you need not worry as there are plenty of other ways to move ahead.

  • Try to shorten the term

When you borrow the money, there will be a limited time to pay it back. It is quite normal for these to run for as many as 2-3 decades. Longer terms would mean more expensive rates. If you want it to be lower, you must try to make the term short besides taking other measures.

  • Look at as many options as you can

This should be a key part of your search for a good rate. No matter what other measures you take to ensure, you get the cheapest loan, you must not leave out this one. There are many lenders whom you can find out there. So, if you don’t get a suitable rate from one or two, that doesn’t necessarily mean that the others don’t have a better deal for you.

Apart from that, there are different types of mortgage in case you didn’t know. You might want to consider each type and choose the one that suits you the most.

  • Keep your finance stable

When you apply for a mortgage, you have to pass through a process before it is finally granted to you. During this period, you have to show that your financial condition is stable. So, don’t take any step that would make the lender think otherwise, and this includes taking other credit, changing your career, etc. They might just decide to increase the interest rate as a final decision. In the worst case, they might even decide not to lend you any money at all.

What information your lender needs?

Before lending you money, the main concern of the lender would be how big of a risk they’re taking. That alone will influence the rates that they offer you. So, they need to be very sure about your financial situation. Apart from the credit report, you’ll also have to inform them about your income and spendings with proof. In addition to that, they’ll also want to know about your savings as well.

What if nobody lends you money at a good rate?

Even though it is possible to ensure that you get a cheap loan, that’s not always the case. In some situations, nothing can be done. What if there’s still a way for you to borrow at a decent rate? You can make that possible by naming someone as the guarantor. This person could be a person in your family or anyone else. What matters is that they should be able to repay in case you’re unable to do so.

Apart from this, you have other options as well. You can try getting the loan along with another person. That way you’d be sharing the property with that person. You can also look for the government or any other types of schemes or first time home buyer tips that can help you in this matter.

Leave a Comment

Your email address will not be published. Required fields are marked *