Mortgage Considerations For First-Time Buyers

A new 99% mortgage with £5k deposit has recently come onto the market for first-time buyers. While this is very exciting, there are some key mortgage considerations for those who are just coming onto the property market…

Affordability

Before you fall in love with a shiny Rightmove listing, it’s best to have an idea of how much you can borrow. Working out your affordability before you start house-hunting will save you certain heartbreak. Lenders will assess your income and financial commitments to make sure you can comfortably afford your mortgage payments (without having to live off pot noodles!). You may have already been told that you can borrow up to 4.5 to 5 times your household income, however, the size of your deposit, any outstanding debts you have, and other circumstances will impact this amount.

First-time buyers living in rented accommodation or still mooching off the folks need to be aware that paying a mortgage and associated household bills can sometimes come as a reality check. Owning a house can put strain on your wallet, especially if your career is still finding its feet.

Budget

Let’s not forget about the additional costs that come with buying a home including stamp duty, legal fees, survey and the dreaded moving expenses. Stamp duty may sound like something you use to seal an envelope but it’s actually a tax on buying property. The good news is that first-time buyers actually get a soaring discount - current stamp duty relief for a first-time buyer is 0% up to a property value of £425,000, and 5% on the portion between £425,001 and £625,000 – think of it as a little gift from the government. While moving expenses are usually paid for upfront, legal and survey support can sometimes be included for free as part of your mortgage deal. Score!  

Legal obligations

Time to get serious for a sec. Owning a home isn’t all meeting the neighbours and picking out paint colours. You’ve got responsibilities such as maintenance, insurance and playing nice with local regulations and planning permissions. Although it’s not a legal requirement to insure a home, most lenders won’t budge on this one. If you’re considering buying a leasehold property, find out how many years are left on the lease. Short terms can put a downer on property values. Most lenders will require 60-80 years.

Future plans

Lastly, peak into the crystal ball and think about the future when choosing a property. Is a mini-you or a furry friend on the horizon? Your proximity to schools or workplaces, and potential for a little DIY magic – these are the things that dreams are made of.

Now that you’re armed with a little knowledge, you’re ready to take on the world of mortgages. Happy house-hunting!