Getting your first home
Buying your first home is one of the most exciting things you’ll do. To make sure you enjoy the experience, we have compiled our top tips to help you get the home of your dreams!
Every penny counts!
To get a mortgage for your first home, you’ll need a minimum deposit of 5%. However, the more you save, the better your mortgage rate will be. A 10% deposit is therefore advisable, as you’ll be able to get a far more favourable rate.
Don’t forget to also budget for your; Stamp Duty Land Tax, valuation, legal and moving fees! See our associated costs with buying a home guide for further information on how much you can expect to pay.
Consider government initiatives
If you are struggling to raise a large enough deposit, there are a number of Government initiatives which could help you to get on the property ladder:
- Help to Buy: There are two parts to the scheme, Shared Ownership and Equity Loan. Shared Ownership enables you to buy a share (between 25% and 75%) of a new or existing property, whereas an Equity Loan enables you to borrow up to 20% towards the purchase cost, meaning you only need a 5% cash deposit and a 75% mortgage, to buy your new home.
- Right to Buy: If you have been living in social housing for 3 years or more, you may be eligible to buy your home at a discounted price from your local council.
Do your sums
Getting a mortgage is a big financial commitment, so you need to make sure that you can afford it! As expert mortgage advisers, we can help you assess your personal circumstances and talk you through all of your options, so you can get a good idea of how much you can afford to borrow.
Get a mortgage in principal
In order to make an offer on a property, your estate agent will want to see an Agreement in Principle from your lender, containing an approximate sum of how much they are willing to let you borrow, which we can secure for you completely free of charge and without obligation!
Keep a look out
When viewing property, it’s easy to get caught up in the moment and forget to check all the essential details. Luckily, we have compiled a few handy tips to help you with your search!
- Always book viewings for the daytime
- Take your own photos
- Check the condition of the building; cracks in the walls, leaks and any signs of damp
- Look at how busy the road is and how much parking is available
- Take note of how well kept nearby homes are.
Check nearby sold prices
When you’ve found a property you love, compare the asking price against other homes that have recently sold in the local area, using a free online house price tool such as Rightmove or Zoopla’s.
As a first time buyer, you’re in a strong position when it comes to buying property, so it’s certainly worth negotiating down the price – the extra cash would certainly come in handy too!
Help with getting onto the property ladder
With increasing numbers of people struggling with raising a mortgage deposit to purchase their own homes, many are having to turn to their parents, relatives or close friends, to help get them onto the property ladder. If you are thinking of accepting financial help from a family member or close friend to help fund your home purchase, there are a number of ways in which they can help, which we have handily compiled for you below.
Receiving monetary gifts
You can receive a sum of money to form all or part of your mortgage deposit. However, to improve your chances of being accepted, mortgage lenders prefer it to be an outright gift from a family member, with no requirement for future repayment – but watch out for inheritance tax!
An individual can give away £3,000 per year tax free, and carry over any of their leftover annual exemption from one tax year to the next, up to the value of £6,000. However, if you are due to be married, you can also give receive an additional; £5,000 if you are the giver’s child, £2,500 if you are their grandchild or great-grandchild, and £1,000 for anything else.
If your family member or close friend has a few pounds tucked away, there are a number of ways in which they can help you and benefit at the same time!
- Family Springboard Mortgage: A popular option with families, enabling a relative to provide 10% of the purchase price as security. But, if you keep up your mortgage repayments, they will receive their money back with interest!
- Joint Mortgage: Your family member or close friend legally own a share of the property and are jointly liable for the mortgage repayments.
Getting a guarantor
To help improve your chance of being accepted for a mortgage, a relative or close friend can either guarantee a proportion of / or your entire mortgage debt. In order to do so, they will need to:
- Be able to cover any of your missed mortgage repayments
- Pay their own mortgage
- Have a number of years left in employment
However, if they are already a homeowner, acting as guarantor for your mortgage could result in you having to pay an additional 3% in Stamp Duty Land Tax!
Buying from family or friends
If you want to buy a property belonging to a relative or close friend, they can sell it to you at a discounted rate from the market value. This is known as a concessionary purchase, and many mortgage lenders will accept this and either base the value of the property on the agreed purchase price, or accept the discount as the buyer’s deposit.
As expert mortgage advisors, we can help talk you through all of your available options and ensure that you get the right mortgage deal for your mortgage deposit type. We will also complete all the necessary paperwork for you, and liaise with your lender, estate agent and solicitors to ensure that your application is a complete success!
Are you are an undergraduate or parent trying to avoid paying a fortune for poor student accommodation? Some mortgage lenders are now looking at university students as potential customers, which could help you to get onto the property ladder and earn whilst you learn through renting out your spare rooms!
It may seem unrealistic, but with today’s high rental prices and relatively stable housing market, many are finding properties with mortgage repayments are costing less than monthly rental rates, making it a more feasible option.
A sound investment?
Many students choose to arrange a mortgage in partnership with their parents, so that both parties can benefit from the venture. But, which mortgage is best suited to your needs?
With a Buy for Uni Mortgage, students aged 18 and over living in England and Wales, can borrow 100% of a property’s value up to £300,000 to purchase a home within 10 miles of their place of study. However, if you borrow more than 80% of the value of the property, you will need to consider the following:
- A parent or close family member will have to act as Guarantor
- You will likely have to pay a higher interest rate initially. However, if you keep up your repayments, you should be able to move to a standard mortgage, once your deal comes to an end.
If your parents already own their own home, they can also save by not having to pay Stamp Duty Land Tax on the purchase of additional property, as it will be in your name!
Family Buy to Let Mortgages
If you are a parent who either pays or is looking to cover the cost of your child’s accommodation, you could benefit from investing in a property for them to live in instead. You will need a Regulated Buy to Let Mortgage, which can be difficult to find on the high street. But, we can help you find a mortgage deal that suits your needs perfectly! – Remember, if you buy a larger property and rent it out to other students in addition to your own child, you will also need a Houses in Multiple Occupation licence!
Want to learn more?
Our expert mortgage advisers can talk you through all of your available options and compare a range of student mortgage deals, to ensure that you get the right mortgage product for your investment plans and individual circumstances, completely free of charge and obligation!
Mortgages for teachers
When newly qualified, part time or supply teachers, apply for a mortgage through their local banks or building societies, they are often overlooked, due to the lenders’ strict lending criteria and lack of consideration for the individual’s personal circumstances. Proving a regular income on a fixed or part-time contract can be difficult, which can automatically make you unattractive to many high street lenders. But, your chances of getting a mortgage are just as good as anyone’s and here’s how.
Use all your income
As a teacher you may undertake additional paid work such as tutoring in the evening or test marking in the school holidays, which can all be used to support your application.
Let your partner take the lead
If you plan to apply for a joint mortgage and your partner works full time, consider adding them as the first name on your mortgage application. It could improve the chances of getting your application approved, as lenders will favour them for their regular income.
Consider government initiatives
If you are struggling to raise a large deposit, there are a number of government initiatives available which could help to get you on the property ladder:
Shared Ownership: Part of the Help to Buy scheme and enables you to buy a share (between 25% and 75%) of a new or existing property.
Equity Loan: The government lends up to 20% towards the purchase cost, meaning you only need a 5% cash deposit and a 75% mortgage to buy your home. If you are looking to buy a property in London, the percentage the government will lend you increases to 40%. However, the property must cost no more than £600,000.
History of bad credit?
If you have had credit issues including; arrears, defaults, County Court Judgements (CCJs), debt management plans or been made bankrupt in the past 6 years, there are still lenders who will consider your application. Our advisors regularly work with adverse mortgage lenders and are well placed to advise you on all your available options.
Get expert advice
Our mortgage advisors are experts in teacher mortgages and can help advise you on how much you can afford to borrow and source the best teacher mortgage deals to suit your individual needs, in order to maximise your chances of being approved first time. They will also complete all the relevant paperwork, and liaise with your lender, estate agent and solicitors to ensure that your application is a success!
If you are looking to get on the property ladder or want to start putting a bit of extra cash away to support you in your retirement, you could get a free 25% cash injection to help you on your way with a Lifetime ISA!
Savers aged between 18 and 40, who open the new Lifetime ISA when it launches on 06 April, can put away up to £4,000 a year and receive an additional 25% tax free, government bonus until they reach the age of 50. By this time, you could have received as much as £32,000 in free cash! – Who doesn’t want free money?
- Contributions to a Lifetime ISA will count towards your annual tax free savings limit of £15,240 – Fortunately, this will rise to £20,000 for the 2017/18 tax year
- If you withdraw cash for anything other than buying your first home or before you turn 60, you will incur a 25% penalty! – Be wise and only use it for home buying or retirement
Is it better than a pension?
The Lifetime ISA can be used to save for your retirement in addition to your pension. But, the rewards of only saving in a LISA are not as attractive and here’s why:
- You can only withdraw cash from a LISA once you turn 60 – Not great if you plan on soaking up the sun and retiring early
- For most, having a pension is just as beneficial, as you save from gross (pre-tax) income – Certainly wouldn’t be attractive to high earners
- If you’re employed, the workplace pension scheme requires that your employer has to pay in as well – You won’t get this from a LISA
What wins, Help to Buy ISA or Lifetime ISA?
You can save in both schemes, but will only be able to use the government bonus from one of them to buy your home. If you are looking to buy a property within the year, the Help to Buy ISA will enable you to get the government bonus faster, with a minimum deposit of £1,600.
But, for those looking or thinking to buy over the next year or so, the Lifetime ISA is far more attractive! Plus, if you already have a Help to Buy ISA and transfer your savings to a LISA before 06 April, the 25% bonus will be applied to the entire amount saved! – Now that’s certainly worth considering!
We have compiled a handy breakdown below to help you quickly see how each compare:
|Question||Help to Buy ISA||Lifetime ISA|
|How much can I pay in?||£1,200 in the first month, followed by £200 a month thereafter||£4,000 a year|
|How does the Government bonus work?||Maximum bonus of £3,000, which you receive upon completion of buying your home||25% applied to your savings at the end of the first year, monthly after that|
|What’s the maximum property purchase price?||Can be used by First Time Buyers to purchase a home up to the value of £250,000 (£450,000 in London)||Can be used by First Time Buyers to buy a residential property up to the value of £450,000|
|How long will I need to have it before I can use it?||No time limit||12 months+|
|How can I use it?||For a mortgage deposit only||Can be used for your mortgage deposit and home deposit|
|Where can I get one?||From most banks and building societies||Stocks and shares providers at present. But, Skipton will have one for launch, and it is expected that other high street banks will follow|
Ready to get moving?
Do you think the new Lifetime ISA will help you reach your savings target much sooner than expected? Are you thinking of buying a property in the near future and would like some advice? Our professional mortgage advisors are at hand to help you with all your mortgage related questions!
They will assess your personal circumstances and explain all your available options, so you can get a good idea of how much you can borrow and/or start searching for your dream home. Their advice is completely free, so get in touch!
Saving for a mortgage deposit
A mortgage deposit is the largest amount of money most people will ever save. It’s a big milestone to reach. But, if you think smart and make a few small adjustments to your current spending habits, the pounds will soon pile up and you’ll be in your new home in no time!
How much deposit will I need?
The minimum amount needed for a mortgage deposit is 5%. However, the more you can save, the more favourable your mortgage rate will be. A 10% deposit would put you in a far stronger position and should be achievable if you are saving to buy a home with someone else – don’t forget to also budget for your moving costs; Stamp Duty Land Tax, valuation and legal fees!
Review your finances
Once you know how much you need to save, a thorough review of your finances could make all the difference. Make a simple list of all your outgoings including your; rent, insurance policies, energy bills, television, broadband, landline and mobile phone contract/s, and how much you are paying for them each month, and compare it with your monthly income, including your current earnings and any regular overtime payments and bonuses – this will give you a solid foundation to work from.
Clean up your act!
If you’re serious about saving for a mortgage deposit, then cutting back on some little luxuries, such as your daily coffee or weekly takeaway, will free up some additional finances for your home fund. Lenders will also look at your credit history and spending habits when you apply for a mortgage, so an orderly bank statement could benefit your application!
Boost your savings!
Cash ISAs and savings accounts are two great ways to make your money grow faster. To make sure you stick to your plan, consider setting up a standing order or direct debit, so that your savings are automatically paid into your account every month.
- ISAs Allow you to save money tax free, up to the annual allowance of £15,240.
- Fixed bonds By depositing a sum of cash for a set period of time, you can secure a fixed interest rate. However, you won’t be able to access your cash until after the agreed time.
- Savings accounts Tend to offer slightly higher interest rates than current accounts. But, you usually need to pay in a certain amount each month to benefit from the interest.
Free, specialist advice & support
When you are nearing your savings target, it’s a good idea to obtain an Agreement in Principle, which we can obtain for you at no charge!
Alternatively, if you would just like some free advice about your affordability options, our expert mortgage advisors are available 7 days a week to meet or chat with you to help you get your dream home.