If you're thinking of buying your first property, congratulations! This is a huge milestone. Of course, with such a big purchase comes a lot of responsibility. To help you navigate the process, here are a few tips for first-time buyers:
1. Educate yourself about the home buying process
Buying a home is one of the biggest financial decisions you will make in your lifetime. It is important to educate yourself about the process so that you can be as prepared as possible. A first time buyer mortgage broker can provide you with valuable information and advice. They can help you understand the different types of mortgages available, and assist you in finding the best deal for your situation. Additionally, they can offer guidance on other aspects of the home buying process, such as negotiating with sellers and navigating the closing process. Working with a mortgage broker is a smart way to increase your chances of success when buying your first home.
2. Get Decision in Principle.
A decision in principle (DIP) is an agreement from a lender that they’re likely to give you a mortgage. It’s based on a assessment of your financial situation, including your credit score and proof of income.
It’s a good way of finding out how much you could borrow. It can also show estate agents and sellers that you’re serious about buying a property. You must have a decision in principle before you can have your offer formally accepted on a property
To get a decision in principle, you’ll need to speak to one of our first time mortgage brokers. They’ll help you find the right mortgage and fill out the application. Once you have your DIP, it’s valid for 90 days. This means you can start looking for properties within that time period, safe in the knowledge that you have an agreed amount that you can borrow.
3. Choose your area(s) and contact every estate agent!
Once you have chosen your areas of interest, the first step would be to make a list of estate agents in those areas and either call or visit every agent and register your details. They will take note of what type, size and price property you are looking for. Example you might want a 2 or 3 bedroom house for up to £180,000.
9 times out of 10 the agent will then ask if you have spoken to a mortgage advisor, you can show your Decision In Principle (DIP) to the agent. This will definitely show the agent that you are serious and ready to buy hopefully within the next 90 days.
They will also show you what properties they have available that suit your requirements and then if any are of interest, you can book a viewing and away you go.
Another little tip – if you go to Rightmove and in the search bar, input you area or postcode. when the list of properties is shown, there is ‘Create Alert’ button at the op. (As shown in the image below) Once the alert is live, you will be notified as soon as any new properties on Rightmove and the property details will be sent to your email address
4. Improve your credit score (make sure you don’t make any mistakes either)
A credit score is a number that reflects the creditworthiness of an individual and is used by lenders to determine the riskiness of lending money to that person. A credit score is based on credit history, which is a record of an individual's past borrowing and repayment activity. The higher the credit score, the lower the risk of default, and the more likely a person is to be approved for a loan. There are many ways to improve your credit score, including paying your bills on time, maintaining a good credit history, and using a credit monitoring service. A credit monitoring service will help you keep track of your credit score and report any changes to the credit reporting agencies. You can also request a free credit report from each of the three major credit reporting agencies once every 12 months. By monitoring your credit score and taking steps to improve it, you can make yourself a more attractive candidate for a mortgage loan. Mortgage brokers often advise their clients to take steps to improve their credit scores in order to get the best mortgage terms possible. Improving your credit score is an important step in securing a mortgage loan with favourable terms.
5. Don’t take on additional long-term debt like credit cards or personal loan.
Mortgage debt is often considered good debt because it's used to buy an appreciating asset – a home. However, mortgage debt can become bad debt if you're unable to make your mortgage payments and end up in foreclosure. If you're struggling to make your mortgage payments, get mortgage advice from a mortgage broker. They can speak to your mortgage lender and see if they can negotiate some terms to make sure you don’t have your home repossessed.
When you are looking to buying your first home, you don’t want to be taking on new long-term debt as this affects your affordability and will limit on how much you can borrow.
Credit card debt and personal loan debt are two other types of long-term debt that you should try to avoid. Credit card interest rates are high, and personal loans usually have higher interest rates than mortgage loans. If you're already struggling to make ends meet, taking on additional long-term debt will only make your financial situation worse.
6. Limit your spending months as much as possible leading up to house hunting.
Making sure you day to day, month to month spending is reasonable especially when you are looking to purchase your first home. As part of your mortgage application and when you apply for a DIP, the mortgage advisor and mortgage lender will review your bank statements. If they can see you are spending 100s of pounds of clothes, drinking and socialising then again this can affect your affordability to how much you can borrow. It’s ion your best interest if you you can limit it as much as possible for the months leading up to looking to buy a home.
So, if you’re looking to buy a house in the near future, be sure to follow these tips. And remember, if you need any help along the way, our team is here to assist you. Book a free consultation with us today and let us help get you one step closer to owning your dream home!
Kommentarer