First Time Buyer

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First Time Buyer

What is a First Time Buyer?

Anyone looking to buy their first home will be classed as a First Time Buyer, so long as the property is purchased as their only or primary residence. It’s become notoriously difficult for First Time Buyers to secure a mortgage in recent years, and the effects of the global pandemic certainly haven’t helped this.

The good news is, there are schemes available to help those struggling to get onto the property ladder. Knowledge and preparation are key to not only finding the most suitable mortgage for your needs but also to ensure you fulfil the acceptance criteria.

What is an Agreement in Principle?

An Agreement in Principle is an indication of how much you can borrow from a mortgage lender prior to applying for a mortgage. This is not essential, although it will be particularly beneficial for First Time Buyers and usually costs nothing to obtain.

As well as showing vendors that you’re a serious potential buyer, an agreement in principle can give you an accurate idea of how much you will be able to borrow prior to viewing properties.

How much can a First Time Buyer borrow?

Mortgage lenders calculate mortgages based on the affordability and credit score of each applicant. Therefore, being a First Time Buyer will not affect your loan application. There are a range of free mortgage calculators available online, which can help you to check how much you might be able to borrow in advance. Although an Agreement in Principle will give a more accurate reflection of this.

How to improve your credit score

An important part of preparing to buy a house is to ensure that you have a strong credit rating. Aside from improving your overall chances of securing a mortgage, a high credit score will give you access to more competitive interest rates. To improve your score prior to application you can:

  • Check that you appear on the electoral roll at your current address
  • Check your address on all accounts and correct any mistakes
  • If you have credit, remain within 50% of your limits and pay off as much as possible
  • Don’t miss or make late payments
  • Special credit builder credit cards can help those who’ve never had credit to improve their score

How much deposit do I need?

How much deposit you need will depend on the type of mortgage that you apply for. For a standard residential mortgage, you are likely to need a minimum of 5-10% deposit. With some home ownership schemes it may also be possible to secure a mortgage with less than a 10% deposit available.

What help is available for First Time Buyers?

There are a range of schemes, designed to help First Time Buyers to buy their first home. During the early 2020s, the government noticed a distinct reduction in high Loan to Value lending, which was disproportionately affecting First Time Buyers.

The Mortgage Guarantee Scheme was introduced in response to this with the aim to encourage lenders to offer 95% mortgages again. It’s available to all creditworthy applicants looking to buy their first home and includes a five-year Fixed-rate.

Speak To An Expert

We’ll take care of all the heavy work. From finding the right mortgage product and providing you with a detailed quote, to submitting the mortgage application on your behalf and guiding you right through to the completion of your mortgage.

Other schemes available

The Help to Buy Scheme (now currently closed) –  offered 20% (40% in the Greater London area) deposit top-up loans available on new build properties, if you could provide the first 5%. The increased deposit reduced the Loan to Value ratio of your borrowing, giving you access to more competitive interest rates. 

The 2021-2023 Help to Buy Equity Loan Scheme closed to new applications at 6pm on 31st October 2022. All eligible homebuyers had to legally complete by 31 March 2023.

The Right to Buy Scheme – Allows most council tenants to buy their council home at a discount.

The maximum discount (Apr 2024) is £102,400 across England, except in London boroughs where it is £136,400. It will increase each year in April in line with the consumer price index (CPI). Some lenders will allow the discount to be used as a deposit to purchase the property.

The Shared ownership Scheme – Purchase 25-75% share of a property, rent is required on the remaining share.

What fees are involved with buying a home?

Arrangement fees

Most lenders charge fees to organise the mortgage and these will vary from lender to lender. These fees will often make it possible for the lender to offer the applicant access to lower interest rates. With some mortgage products, these fees are waived as an incentive to the customer.

Valuation fees

An independent evaluation is required before a mortgage can be approved on your new home. Some lenders may offer free valuation as part of a mortgage deal, but usually, the applicant pays.

Stamp duty

On 23 September 2022, the government announced that the threshold for paying stamp duty will be raised to £425,000 for first time buyers.

Legal fees

Solicitors carry out conveyancing and local authority searches, the fees for these services will vary between firms.

How can Mortgage Broker Services help First Time Buyers?

Here at Mortgage Broker Services, our Mortgage Advisers know how much of a huge responsibility it is to buy your first home. As well as advising you which type of mortgage will best suit your needs and which lenders will be able to offer it to you, we can provide guidance throughout the mortgage application process.

We have access to deals that you won’t find on the high street and can save you the time and stress of a rejected application, which can happen if you choose the wrong lender for your individual circumstances. Contact us today.


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