As a first-time buyer, getting a mortgage can be both daunting and exciting in equal measures. Planning ahead will help gain some control over a process that can be nerve-wracking and complex.
So what can people do to increase their chances of success with first time buyer mortgages?
Save for a decent deposit
If you only do one thing before you apply for your first mortgage, save up as much as you can for a decent deposit. The amount of deposit not only determines whether your application is successful, but also the interest rate charged if you’re offered a loan. Although it’s easier said than done, by saving a 30%-40% deposit you could pay half the mortgage interest of first-time buyers who can only afford a deposit of 5%-10%. In the long-term it’s very much in your interests to save, save, save if you can.
Increase your credit score
A high credit score is an important part of obtaining a mortgage, as lenders always check your credit report before offering any type of borrowing. You’ll be at an advantage if you have a couple of credit cards that have been used responsibly, and to which regular payments have been made on time. Lenders also use the electoral register to verify an applicant’s identity, so it’ll speed up this process if you’re already registered.
Be realistic about what you can afford
Being realistic about how much you can afford to pay each month will make sure that you’re not over-stretched financially. Being stressed by monthly payments that can only just be met takes away the joy of owning a first home, so buying a smaller property in the area that you like, or a larger house in a less desirable area is probably a good idea.
Keep checking the mortgage rates and be prepared to act quickly if you’re in a position to move forward, as deals can be withdrawn at short notice. By being aware of lenders’ requirements before you approach them for a mortgage, you’ll stand the best chance of being offered a good deal that you can take advantage of straight away.