For a first time buyer, obtaining a mortgage can seem like a huge wall to scale. The housing market is a difficult place to navigate for those without a lot of capital or income and is changing all the time. However, if you’re looking to secure a first time buyer mortgage in 2018, with some carefully planning and the right financial strategy you will be well on your way to achieving the approval you need to move in to one of our developments.
Find the right mortgage
At the end of last year a drop in approved mortgages indicated the reticence of some lenders to offer mortgages to all potential buyers. The key is to find the right mortgage for you – doing this will increase the chances of yours being approved and also ensure that you have no issues repaying it. Key to this is:
Affordability. Lenders have far stricter affordability criteria than before the recession so make sure that your application is for a mortgage you can genuinely afford, alongside your other costs and obligations.
Fixed or variable. Work through the options for fixed and variable interest rate mortgages with someone who can thoroughly explain them to you if you’re not clear. Interest rates rose last year for the first time in a decade (from 0.25% to 0.5%) and are predicted to go up again in the near future so factor this into your thinking.
Shop around. There are many more mortgage providers than there used to be so you don’t have to go with your existing bank.
Get the numbers in order
Your credit score matters. It’s not the only factor involved in mortgage lending decisions but the contents of your credit report will have an impact on how positively you’re viewed by a lender. The higher the score, the more likely you’ll get a wider range of options and better deals, cost-wise.
Save and clear debt. The more you have in savings (i.e. the deposit), the better your mortgage options will be. Debt hampers mortgage applications so pay off as much of this as you can before you start the applications process.
Make sure you have the right paperwork. You’ll need proof of income from an employer – or three years worth of accounts if you’re self employed.
Help to Buy
The government’s Help to Buy scheme applies to new developments like Higgins Homes and is ideal for first time buyers looking to get onto the housing ladder. With a Help to Buy equity loan the Government lends you up to 40% of the cost of your new home. That means you need just a 5% deposit of your own and a 55% mortgage, significantly increasing your chances of being approved.