By Bright Advice
With interest rates at an all-time low, now could be the perfect time to purchase your first home. We sat down with Bright Advice this month to get some professional advice when it comes to mortgages for first-time buyers.
Getting that first step onto the property ladder is harder now than it ever has been, with COVID-19 taking some of the blame
for this. As a first-time buyer, purchasing a home will more than likely be the biggest financial commitment that you’ve made on life’s journey so far. Therefore, although incredibly exciting, the process itself can be daunting too. This month, we thought it would be a good idea to delve a little into the world of mortgages for first-time buyers and shed a little light on what it takes to get your feet firmly on the ladder.
IS A MORTGAGE RIGHT FOR YOU?
The first question that you need to ask yourself is, can you actually afford a mortgage right now? If the answer is yes, then how much can you afford? This is both in terms of a deposit to put down and also the monthly repayment you’ll have. Figuring out and staying within your financial comfort zone is key. If your monthly mortgage repayment is at the maximum of what you can afford, what happens if the boiler breaks? Or the car breaks down? Or the mortgage interest increases? Living within your means will enable you to prepare for these situations without breaking the bank.
HOW MUCH CAN YOU BORROW?
When lenders work out how much a buyer can borrow, it used to be as simple as lending four times their own salary, or combined salary if buying with someone else. Now it’s a little bit more complicated than that. The lender will work out your affordability. They do this by taking a detailed look at your finances, including your credit report and debt to income ratio.
DO YOU HAVE A BIG ENOUGH DEPOSIT SAVED?
It could be said that the bigger your deposit, the better the chance of a mortgage offer. COVID-19 has made securing a mortgage
offer harder than it ever has been, therefore having a solid deposit poses less risk to the lender as it proves that you have a level of
discipline when it comes to your finances. Whether you save, save and save some more, you are gifted money from a family member or it comes from inheritance – a deposit is a deposit, and there will be no mortgage without one!
STRUGGLING TO SECURE AN OFFER? SOME ALTERNATIVE OPTIONS FOR YOU…
Fear not! If you are struggling to secure a mortgage offer, there are some other potential routes you can go down. To mention a few…
• The Shared Ownership Scheme
• Help to Buy equity loan
• Family guarantor
• ‘Mates Mortgages’ (purchasing a property with friends/family members and splitting the mortgage)
Whatever option you feel is right for you, it is always worth reaching out for some advice. A qualified advisor can do the leg work for you, providing you with options tailored to your personal situation whilst giving you the peace of mind that you deserve when the time comes to take the first steps to owning your home.