First time buyers: What do you need to know when buying your first home?
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Now is a great time to buy your first home as the Government has issued a stamp duty holiday lasting until March 31, 2021. The Government predicted that changes to stamp duty would help 95 percent of first time buyers in England and Northern Ireland and up to 80 percent in London, with some saving up to £15,000 on their purchase. With that in mind, head of lending at the Mortgage Advice Bureau, Brian Murphy, has provided Express.co.uk with everything you need to know when buying your first home.
Mr Murphy says the most important thing to do is start by getting yourself mortgage ready.
He said: “When applying for a mortgage or when remortgaging, the lender will ‘stress test’ your affordability to see if your finances are in order.
“This will determine whether you’re able to afford the repayments, alongside any other financial commitments you may have, and ultimately make sure you have a mortgage you can afford.
“The tests will include a look at your income vs your expenditure, so it’s important that you’re able to show you are capable of keeping your finances in order.
“If you can get yourself as mortgage ready as possible (around six months prior to you needing a mortgage), then when the time finally comes, you will be in a stronger position and your mortgage could go through much quicker.”
Review what outstanding loans you may have
Mr Murphy advises you to pay off any outstanding loans before you consider applying for your mortgage.
He said: “Avoid taking out any more loans in the meantime.
“However, don’t let this put you off speaking to a mortgage adviser as it doesn’t necessarily mean you are not suitable for a mortgage.”
Mr Murphy also advises future homeowners to pay their bills on time, which can be anything from a phone bill to a general household bill.
He explained: “This will prove you’re reliable and financially independent.”
Consider your credit rating
A good credit rating is vital to securing a good mortgage, and a great way to improve your credit score is by getting on the electoral roll.
Mr Murphy said: “This makes it easy for the lender to trace you to officially living at the address.
“Also, make sure any bills you have are registered to your current address, so everything is easy to trace.
“This is surprisingly important and one of the simplest ways to significantly boost your credit score.”
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Another way of increasing your rating is by using a credit card responsibly, as it shows you are able to look after your own finances and pay off debts within a deadline.
Mr Murphy explained: “Remember to prove that your spending patterns are in line with how you see yourself when you have a mortgage.
“If you have any cutbacks you can make, then now is the time to do it.
“Perhaps if you have a gym membership that you don’t use regularly, or you have a subscription to satellite TV that you probably don’t need, then it would be a good idea to cancel them for now, just to save you that extra bit of money. After all, every penny counts!”
Try to save on a regular basis
Having a decent amount of savings in your bank account can be good for a number of reasons.
Mr Murphy explained that savings can be traced back to your bank statements, so it is important to show you are able to safeguard money for long periods of time.
He added: “Not only can it show where the money for your deposit has come from, but it can also prove to your lender that if you are able to save a lump sum or regular amount each month, then this money could go towards paying off a mortgage.”
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