Calling all first time buyers.
Working to get your foot on the property ladder as a first time buyer is no easy task. With a market that has seen a dramatic slowdown, now could be the perfect time to buy your first home. There’s a lot to consider, like which area to choose to live or what type of property to buy. All else considered, your budget should be your top consideration. The last thing you want to do is to purchase something beyond your means and end up in a financial crisis. Seriously considering buying your first property? Then you should also be thinking about how you can afford it. Here are the best six budget planning tips for first time buyers from Mortgage Squared.
Paying rent every month is almost equal to paying monthly mortgage fees except you’re not gaining anything! It can be especially difficult to save a deposit for your new home if you’re paying so much each month in rent. If you are willing to give up your own space for roughly six to 12 months whilst you save your money can help. You are likely to have enough for a deposit and be a homeowner much sooner than if you were trying to save money and pay rent. Moving back home with family may sound like a last resort, but you will be able to save a lot more.
When moving in with family is not always an option there is still hope. If you must rent, there are ways to work around this so you can still pocket some money for a deposit. You can always find a cheaper place to live but this may mean a smaller property. It maybe also beneficial to consider opting for a house share rather than renting a property of your own to help lower the costs.
Put your savings to work
Why have money just sitting in an account? You could be earning money on those savings. If you have a decent interest rate, you can reach your savings goal faster. Pick the right account dependent on how you are saving. A regular savings account may help you if you put money aside each month. If you need more flexibility with the amount you put away.
Research areas and locations
Deciding where to buy your first home is just as important as saving for your deposit. If you haven’t picked the area you want to purchase your new home in yet, do some research to find out what you can afford. Make sure the area fits your lifestyle and covers all your needs. Be sure to check out what the prices are for the type of property you want to buy, as well as council taxes and any other costs that need to be factored in. Once you have an idea of what the cost of your property will be, both when purchasing and when actually living there, you can start to properly budget to save for a specific goal.
Think about monthly mortgage amounts
Getting a mortgage means you will be required to pay a monthly amount to your lender to cover the amount you have borrowed, so it’s vital you speak to a lender or financial adviser to ensure affordability. Here at Mortgage Squared we will be delighted to assist or recommend a financial services professional – simply ask us for details. We love helping first time buyers to get their foot on the property ladder.
Plan out home-buying costs
As first time buyers you can forget there are more costs to consider once you’ve bought your home. You should make sure your budgeting plan includes enough to take care of these after you’ve completed on your first property. You don’t want to end up in a situation where you’re strapped for cash and are barely making your mortgage payments.
These other costs can include:
- Solicitor fees
- Survey costs
- Mortgage arrangement costs
- Estate agent fees
- Buildings and contents insurance
- Furniture and decorating requirements
- Necessary renovations or maintenance
Take advantage of the Help to Buy scheme
The government offers a Help to Buy equity loan scheme to first time buyers in England on properties that are new builds worth up to £600,000. It’s great for first time buyers who only have a 5% deposit saved up. It gives you an equity loan that can be used towards purchasing a house on a repayment basis, rather than on an interest only basis. The repayment plan is interest-free for five years. This gives you time to save more money. As long as you are over 18, the equity loan you receive depends on where you live.
Bonus tip – Know your credit footprint
Credit files are always an important component within the mortgage process. Lenders will carry out a credit search to see what your credit footprint is like and to see how well you have managed your credit. Missed payments and IVA’s may not stop you from getting a mortgage but it can limit who will lend to you.
We suggest that you get comfortable looking at your credit file. This is to make sure that you don’t have any sneaky missed payments that you may have forgotten about. Especially things that could jeopardise your chances of getting the amount that you want to borrow.
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