First Time Buyers Guide.
Are you looking to buy your first home and need some guidance? Check out our guide to help you through it!
First-Time Buyers mortgage advice.
If you are thinking of buying your first home, you probably have a ton of questions to ask an expert.
We have collated all of the questions we get asked from our first time buyer clients to give you a list of questions and answers that will hopefully help.
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First Time Buyer Questions
Answered by an Expert
A First Time Buyers Guide
A first-time buyer is someone who has never owned a property before, either in the UK or abroad.
You can apply for a mortgage any time after your 18th Birthday. However, there will be almost nothing on your credit file. This can create problems when lenders do their initial checks as you will have a lower credit score.
You will normally need to save a minimum deposit of 5% of the purchase price. So on a purchase of £150,000 you would need at least £7,500. The more deposit you have the better the potential interest rate that will be available, every additional 5% tends to unlock more attractive rates up to about 40%.
Most lenders will be prepared to lend somewhere between 4 & 4.5 times your gross salary, there are some lenders that will go a little higher depending on your circumstances.
Well, there’s a million-dollar question!
There are several factors to consider and it’s impossible to say without the following information: –
Mortgage required & deposit available – The larger the deposit, the lower the mortgage required. The lower your mortgage is the lower your monthly payment will be.
Term of mortgage – the lower the term the higher the monthly payment.
Interest rate available – The higher the rate, the higher the monthly payment.
Credit Information – The better your credit score, the more competitive the rate will be. The better your rate the cheaper the monthly payment.
The above information will always be required in order to establish monthly payments.
It’s always a good idea to get your mortgage approved prior to placing an offer on a property, many estate agents will not even let you view a property unless you can prove you can get a mortgage. A decision in principle can normally be obtained in less than an hour with most major lenders, at most it should be no more than 48 hours.
The information normally required to obtain a mortgage offer is as follows:-
• Proof of ID – Passport, Driving License.
• Proof of address – Utility Bills, Banks statements (dated in the last 3 months).
• Proof of Income – Last 3 payslips and sometimes you may need a P60.
• Bank Statements – 3 months.
• Proof of deposit – Some lenders will want to see a bank statement showing available funds for mortgage deposit
After having an offer accepted anywhere from a few days to six weeks would be the normal turnaround time to get a formal mortgage offer. The offer is granted after the lender chosen has checked and approved all information provided.
Prior to obtaining the mortgage the most common fees that need to be considered are
• Mortgage valuation and survey costs depending on lending criteria.
• Mortgage application and arrangement fee again depending on lending criteria.
• Solicitor fees including disbursements.
• Buildings insurance.
• Contents, Life, Critical Illness, and Income Protection Insurance – all recommended depending on budget but optional.
• Stamp Duty – depending on property price and whether a first-time buyer.
Costs to consider after purchase include new furniture, potential maintenance and decoration.
In short, the answer is no. Legally, you don’t need a solicitor to buy a house in the UK. You can manage the process to buy a property without a solicitor.
However, conveyancing is a complex process and proceeding without a solicitor is not recommended by experts.
Unless you’re an expert in conveyancing and you know what, you’re doing, it’s best to hire a solicitor to help manage the process for you.
From September 2022, First Time Buyers became exempt from Stamp Duty on properties up to £425,000 and pay 5% on the portion between £425,001 and £625,000. In other words, First Time Buyers who buy a property up to £625,000 will pay no Stamp Duty on the first £425,000 and only pay 5% on the remaining amount, which would be £10,000.
Yes – Some lenders will allow mortgage applications to be submitted on a joint borrower, sole proprietor basis where a member of family or in some instances even a friend’s income can be added to the application. This will increase the amount that a buyer could afford. Only the buyer will own the property and all borrowers on the mortgage would be liable to pay the mortgage.
A first-time buyer can buy a property from a member of family at a discounted rate normally know as a concessionary purchase, so if the value of the house was £150,000 and the discount was 10%, there would be a £15,000 discount, meaning the mortgage would be for £135,000, in effect no deposit would actually be put down due to the discount.
Most lenders like between 3 to 6 months employment history, there are some that will insist on 12 months and a select few that would be happy with a letter from a new employer stating that employment was to start sometime in the next 3 months.
Getting a mortgage will not be easy if you’re not employed/self-employed, however there are a limited number of lenders that may consider income from other sources, such as benefits and maintenance.
A first-time buyer can be self-employed, providing certain criteria are met. Most lenders will want a minimum of 2 years self-employment, a select few may use 1 years self-employed income. The interest rate is normally higher with only 1 years self-employed income.
Income documents normally asked for
SA302 Tax Calculations and corresponding Tax Overviews.
Some lenders may want an accountant reference.
Certain lenders still ask to see actual accounts.
Yes, a first-time buyer can get a mortgage if there on the CIS scheme, some lenders will deem them as self-employed and require last 2 years SA302 Tax Calculations and corresponding Tax Overviews, there are a select few that deem CIS income as employed, providing tax is deducted at source, this normally works out better for the CIS contractor.
There are lenders that require permanent rights to reside, however a selection will accept pre settled status and depending on amount of deposit even allow mortgages on a tier 2 work visa.
There is no legal requirement to have life cover, however it would always be prudent to take it, the cost is negligible for the peace of mind it provides.
Normally lenders require you to have a residential mortgage, there’s a limited number that will allow first time buyers to take a buy to let.
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Frequently Asked Questions
With a first-time buyer mortgage, you’re likely to be looking at a 90% or 95% mortgage rate (which means you’ll need a 5% or 10% deposit saved).
There is no set minimum credit score required to buy a house in the UK. A mortgage is only available if your credit score is high enough to be considered by lenders.
The First Homes scheme, announced in June 2021, provides assistance to first-time homebuyers in England. First-time buyers will be able to buy a number of new-build homes at a discount as part of the scheme.
It will take about an hour for our free mortgage consultation in Doncaster. Upon completion of your consultation, we can arrange an agreement in principle for you in about 24 hours. A formal offer takes about three weeks.
You must provide three payslips to prove your income if you are an employee. You will need to supply the latest 2 years’ accounts if you are self-employed in Doncaster. Additionally, you must provide proof of identity, address, and three months of bank statements.
An agreement in principle typically lasts between 30 and 90 days, but it can vary based on your lender. It is quite simple to renew an agreement in principle if it expires.
You can do it, but it will be harder. By putting down a higher deposit, perhaps 10% or 15% of the purchase price, you can demonstrate that you can afford a mortgage.