First Time Buyers

Get in touch for a free, no-obligation chat about how we might be able to help you.
Get In Touch
1 Step 1
keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right
First Time Buyers
First Time Buyers

First Time Buyer Mortgage

Tom and Jadie talk to us about First Time Buyer mortgages.

What are the typical requirements to apply for a mortgage as a First Time Buyer?

We need to do a full assessment with a First Time Buyer, because they’ve never looked into how much they can borrow. They may not have looked at their credit reports before.

So we collate all the information, including a copy of the credit file, and have a conversation with the First Time Buyer looking at the three key areas: how much deposit they have; their credit file and and their incoming and expenditure. That will inform the path we guide them on.

What is the maximum amount that can be borrowed for a mortgage as a First Time Buyer?

It very much depends on the outcome of the conversation we just mentioned around affordability, credit scoring and deposit. We would sit down with the client and go through all of those points, to work out not just the maximum that they could borrow, but more importantly, what would be affordable for them.

Often we can put those figures into a lender’s calculator and it will throw out a figure that is significantly more than they need or could comfortably afford. So the advice process is not necessarily about finding out the maximum, but what would be the most affordable and appropriate for the client.

What’s the minimum deposit required?

To give yourself access to the widest possible choice of products, you would ideally want somewhere between a 5% and 10% deposit. Generally, the bigger the deposit, the more doors it opens to different products and slightly better interest rates.

We will work out with a client how much they have access to. It may be that at this moment they’re not in the best position, but in 6 to 12 months they will be after saving a little bit more. We often guide First Time Buyers on where they need to get to in terms of deposit to put themselves in the strongest possible position.

What are the types of interest rates available on a mortgage for a First Time Buyer?

First Time Buyers have access to all types of interest rates: fixed rates, variable rates, discounted rates… To find out what’s best suited for them we explore their personal circumstances and what they need from their mortgage over the next few years. That will guide our recommendation as to what type of rate would suit them individually.

What are the pros and cons of fixed rates vs variable rates for a First Time Buyer?

A fixed interest rate essentially does exactly what it says on the tin – it will fix the payment on the mortgage for a prescribed number of years: two, three, five or even 10 years and beyond.

The advantage is that you will be able to budget exactly what your mortgage payment is going to be for that period of time. For First Time Buyers, who may not have had a property before and perhaps lived at home with family, knowing what your biggest outgoing is every month is obviously very useful.

Variable rates can go up and down, depending on what happens in the marketplace. The advantage of a variable rate is that if interest rates went down, your rate would also fall, potentially saving you money each month. But on the flip side, you need to manage the risk of that type of product. As we’ve seen in the last few years, interest rates can go up quickly. If the Bank of England puts the base rate up, you’d have to be able to afford the increase.

So there’s pros and cons to both. For a First Time Buyer we would always explain the risks associated with that. Potentially a fixed rate may be more beneficial and preferential to a First Time Buyer initially, depending on their circumstances. It helps them understand the overall costs of property ownership.

Are there any government schemes available to help First Time Buyers?

Common schemes to help with deposits include certain savings accounts that the government has launched over the years. We previously had the Help to Buy ISA and we’ve now got the Lifetime ISA, which is essentially a savings account – where you pay in an amount of money and the government tops that up towards the purchase of a property.

We often see clients who have been saving into one of those accounts for a number of years. That can certainly help from the deposit side of things.

We did also have the Help to Buy loan on new build properties, but that scheme is now finished. You’ve also got shared ownership schemes and affordable housing schemes where people living in certain areas can access properties at reduced market value.

Again, it’s worth speaking to an advisor that understands those schemes because not every lender will be able to offer you a mortgage on them. You might walk into your own bank or building society and they can’t help.

You might then feel a bit despondent, thinking it’s not possible. But somebody who can access a broad range of products may be able to help with one or more of those specific schemes.

What documents do I need to get pre-approved for a mortgage as a First Time Buyer?

The documents anyone needs for a mortgage are up-to-date identification – like a driving licence with your current address – and three months of bank statements for the account that your pay goes into.

We also need confirmation of income. If you’re employed, that means the last three months of pay slips, and if you’re self-employed there are different ways lenders may look at you. Generally the self-employed need tax returns, a copy of their company accounts and business bank statements.

It’s also always helpful for us to have a copy of your credit report, to see your outgoings, balances on any unsecured debt and your credit history over the last six years. We use all the documents to find the most suitable mortgage lender.

Speak To an Expert
Purchasing a new home or remortgaging can be daunting, but we’re here to make it easy. We’ll find the right solution for you, easing the confusion, so you can look forward to your next chapter.

What are the steps in applying for a mortgage as a First Time Buyer?

The very first step, before you even start looking at properties, would be to speak to an advisor who can access the widest possible choice of mortgage products.

The last thing you want to do is to go out and fall in love with a property and then find it may not be achievable. Talking to an advisor first means you can understand your affordability and the other aspects of purchasing a property.

We can then help you get an Agreement in Principle with a lender so you can confidently view property. Once you want to make an offer, you can demonstrate to the estate agent that you’re financially qualified and able to proceed.

Why might I not be able to buy a property as a First Time Buyer?

It can be for many different reasons. It could be income, deposit level, credit score – or the type of property may not be suitable for a standard mortgage.

A qualified advisor will guide you through all of the steps and give you a better understanding of the process. We’re here to put you in the strongest possible position once you find a property to proceed with.

What are common mistakes to avoid when applying for a mortgage as a First Time Buyer?

The key mistake is not being financially qualified – if you don’t see someone to really understand your finances, you can waste a lot of time.

Some of the price comparison sites let you put your details in to get an idea of what you can borrow. But their questions are quite misleading and don’t necessarily ask for the information that a lender would need. People often feel that they can borrow more than they actually can – or conversely could borrow more than they think.

So the biggest common mistake is not seeking advice. Another thing we find is that when First Time Buyers mention the process to family members and friends, they get bombarded with information that may not necessarily be relevant in the market today.

Obviously parents have a vested interest in their children and give them lots of advice. Many clients come to us and say that when their mum and dad got a mortgage in 1994 this is what they did. But things have changed slightly since then!

So just be careful about misinformation from people who may not be as up-to date with the process as an advisor is. Come to us and ask us the question – we’ll give you the right information that is relevant now.

The mortgage process is almost like a game of Guess Who – you have all the faces up at the beginning and that’s all the lenders. As we’re having our conversation we start to knock a few of them down, because we’ll know that certain things won’t fit with certain lenders

We can’t emphasise enough the importance of getting the correct information at a really important time of your life. You’re about to make the biggest purchase you ever will.

What happens if I miss a mortgage payment as a First Time Buyer?

With any mortgage you have to be honest and transparent with the lender. If you’ve missed a payment due to a financial issue or life event, speak to that lender as soon as possible to work out what you can do.

The worst thing you can do is bury your head in the sand and not talk to the lender about it. If you get to a point where you’ve missed payments and you’re not in communication with the lender, they have the right to repossess the property – that’s the last thing we want for anybody.

You could also pick the phone up and speak to us, because there may be ways we can help. We can put a plan in place and look at your finances and affordability. Our service as your advisor doesn’t stop when you move into the home. We’re always at the end of the phone if there is ever anything you need to speak to us about. We’ll help and advise as best we can.

Can I qualify for a mortgage as a First Time Buyer if I have bad credit?

Yes, but depending on its severity, bad credit does come with its hurdles. The lenders don’t shut their doors, but it may impact the amount of deposit you need. They may ask for a little more to give them security and confidence that it’s affordable for you.

Again, talk to an advisor and let them look at your credit report. They will know who to place you with and the best scenario to work towards for you.

Is it possible to get a Buy to Let mortgage as a First Time Buyer?

It’s not impossible, but the number of lenders that allow a First Time Buyer to take out a Buy to Let mortgage is quite narrow. They will be interested in understanding why you want to let out your very first property.

It comes down to risk from the lender’s perspective. If you’ve never owned a property before and you’re going into a commercial arrangement, do you understand the ins and outs of it? Can you manage a period of time with no rent coming in? Have you considered all the nuances around tax and extra costs?

We would certainly explore the suitability of that for you. We would make sure you understand the additional risks associated with buying a rental property rather than a residential one as your first home.

What else do we need to know about mortgages as a First Time Buyer?

To summarise what we’ve said here – speak to a qualified advisor who has experience of helping First Time Buyers, because we will guide you through the process from start to finish.

We often speak to people who feel a little bit overwhelmed at the beginning. But actually buying a home does follow quite a set process and once we break it down for a client it’s less daunting. We start with making sure you’ve got the deposit, the affordability, the credit score, and then get you an Agreement in Principle.

Next you go out and look for a property and come back to us when you find one. We then guide you through applying for the mortgage, solicitors, the survey and the other services that we offer in terms of home insurance and personal protection.

We don’t charge a fee for our services. We work on the basis that a new client comes to us and gets a great level of service from us. Then hopefully they will come back and use again in the future when their mortgage needs to be reviewed.

So finding the right person that understands you, and will take you through that process and guide you at every point, is something we strongly recommend.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.