MortgagesProperty

Experts Reveal How First-Time Buyers Can Get Mortgage Ready

Couple with baby receiving keys from estate agent. Buying new home.

Mortgage experts reveal how first-time buyers can better prepare themselves for a mortgage application and the essentials they should be aware of to avoid unnecessary costs and make the most of government support. 

A first-time buyer is defined as anyone who has never owned or currently owns property, either alone or with someone else. You must not have owned property abroad and this includes if you inherited a house. 

This is an important distinction to make since there are some major advantages to being a first-time buyer.

Prior to 2020, the Stamp Duty Land Tax was waived for all first-time buyers, but due to the pandemic, the government applied this benefit to all house buyers, to help support the struggling economy. 

But in September this is going to end and will return to being available to first-time buyers only. Despite this, being a first-time buyer still places you in an advantageous position. 

Man looking at laptop. Using calculator.

Kev Tilley, from Mortgageable.co.uk, explains: “Being free of a ‘chain’ means you have no house waiting around to be sold, which is one of the major causes of delays in the property buying process. As a result, first-time buyers can make lower offers than others who may indeed be in a ‘chain’, and so you may get a better deal and get things moving much faster.”

First-time buyers should also be aware of the costs associated with buying a home. It’s not just the cost of a house, so it’s important to be aware of these additional fees and prepare for them in advance. 

The majority of lenders require you to put a deposit down and the government is providing support by offering to secure mortgages with only a 5% deposit.

The Government is also offering other forms of support to first-time buyers, in the form of the Help to Buy Equity Loan. This is where the Government put down a 20% deposit, meaning first-time buyers are only required to find 5%. 

Couple with keys to new home

Another Government scheme is Shared Ownership, this is where you own a percentage of the property and rent out the remainder, enabling you to reduce the required deposit and monthly repayments. 

Kev added: “The deposit is the main cost first-time buyers need to save for, yet other significant costs include around £2,000 for conveyancing fees and if applicable stamp duty.”

“A building survey will also need to be accounted for and the exact cost will depend on how comprehensive it is, but on average this will cost around £500.”

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Master of the budgets. Provider of the tips. Author and owner of DumbFunded.co.uk.
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