Buying a property for the first time? Here’s what to expect.

Limestone Sales & Lettings Office Manager Paul Neale talks about what you can expect as a First-time buyer and how to successfully join the property ladder.

There comes a time in everyone’s life when you invest in your first property. However, it isn’t an easy step to take; it is time consuming and means spending a lot of money. Statistics show that the average first-time buyer is aged 30, and the average UK Homeowner will pay off their mortgage by 69 years old. Due to this, many are eager to get onto the property ladder as soon as they can. As of January 2018, there were 24,500 new first-time mortgages. So, how can you become a successful first-time buyer? Here are some top tips from Limestone to you.

Put yourself in a position to buy:

This may seem like one of the first things you would prepare yourself for, but there are still many things to consider. To begin with, you need to try and save on average 5%-20% of the cost of the home you’d like. So, say you’d like to spend £150,000 for a home, you’d need to save at least £7,500. If you are sensible with your money and save more than 5%, it grants you access to a wider variety of cheaper mortgages available. Speaking of mortgages…

Shopping for a mortgage that is suited best for you is key:

Shopping for a mortgage is just as important as shopping for a house. There are many lenders with many different deals to offer, so it is important to have a good look around and weigh up your options. At Limestone, we have an exclusive relationship with Lewis Christopher, a financial advisory company that helps source a variety of mortgages including for shared ownership mortgages, no deposit mortgages, and guarantor arrangements. Find out more about their services here: https://bit.ly/2FOv9Dc

Take a look at what local estate agents have to offer – and get yourself a good relationship with them:

Understanding the different estate agents within the area that you wish to move to will help you to feel more at ease with the help of expert advice when buying your first home. At Limestone, we have 20 years’ experience in the local property market. This means that we have top knowledge and advice for first-time buyers, along with properties best suited for you to consider on our website where you can gain all of the key aspects of the properties you are interested in.

There are many other costs that come with buying a home:

Budgeting for a home and a mortgage is one thing, but it is important to budget for additional costs. This could include home insurance to protect your home, moving costs to cover moving vehicle services and extra savings in case the property you have fallen in love with needs vital renovations such as plumbing repairs or central heating installation. There are other costs such as admin fees, booking fees, solicitor’s fees, completion fees, local authority service etc. To cover your back on costs like these, you would need to save anywhere from £4,000-£15,000.

Location, location, location:

It is important to thoroughly research the area you want to live in and see if property prices are within your budget. If you struggle to find a property that you can afford within your desired location, expanding your search by even a few miles may open up new possibilities. Expanding your search criteria allows you to be more open-minded about what you want and how that lines up with what you can achieve.

 

At Limestone, we always have a range of properties available to buy that are suited for a first-time buyer. For example…

One-Bedroom cluster home in Newport Pagnell is currently available for sale within a suitable price range of £165,000. This is an ideal home for a single person or a couple to move into. It has a double bedroom with a built-in wardrobe and allocated parking space. Find out more about the property here: https://bit.ly/2U6DJ3Z

Another ideal property is this 2 bedroom bungalow in Blakelands, which is available for sale within an appropriate price range of £214,995. This property has a garage, shower room and a large rear garden, giving the opportunity for extending. View the property here: https://bit.ly/2RKpEwl

Overall, it is important to understand that you cover all costs when being a first-time buyer, from the house itself, the mortgage and additional housing costs. Keeping an open mind and levelling your expectations about the whole experience will ensure that you get the best property that you can within your budget.

 

For more tips like these and to get the best price for your property, contact the team on 01908 234 111 or email us at info@limestonemk.co.uk

 

A Beginner’s Guide to Mortgages

Applying for a mortgage is one of the most expensive (and daunting) commitments a person can make in their lifetime. For aspiring first-time buyers, it can be difficult to navigate which mortgage is right for you or how to get a better deal when considering a remortgage or selling your property. Our guide covers the most frequently asked mortgage questions:

1. What types of mortgages are available in the UK?

When you considering mortgage products from various banks and building societies, the two main mortgage products are:

Repayment Mortgages

A Repayment Mortgage means you pay a monthly sum to your mortgage lender that pays off part of the capital you owe for your property (actual price of the mortgage sum) and the interest accrued. For example, if you set your mortgage term for a set-time of 25 years, you will gradually reduce the debt you owe and the amount of interest paid will decrease. If you keep up with your payments for the entire mortgage term, you will have no outstanding mortgage debt to pay and you will own your property outright. If you choose to re-mortgage, you should have a lower loan to value ratio (LTV) and therefore could have less to pay in mortgage costs per month.

Interest-only mortgages

An Interest-only mortgage means you only pay off the interest accrued on your mortgage each month and not the capital. Your monthly payments will only cover the costs of borrowing the money from your mortgage lender and does not go towards paying off the property. At the end of the mortgage term, you will have to pay off the capital money you owe on the property in one lump sum.

2. What is a mortgage rate and how does this affect what mortgage product I choose?

A mortgage rate is the interest rate charged when you take out a mortgage. When choosing a mortgage product, you will often find that you can get fixed rate mortgages which offer a set interest rate for a length of time (i.e. 2 years, 5 years) or a variable interest rate which can go up and down dependent on benchmark interest rate (determined by the Bank of England Base Rate or the lender). A fixed rate mortgage offers certainty to mortgage payers that their monthly interest payments will stay the same even if the benchmark interest rate rises or falls.  A variable interest mortgage will follow the standard variable rate of the bank which has made the loan which can fluctuate, meaning your monthly payments can change dependent on if the interest rate rises or lowers. Tracker mortgages also work in a similar fashion but the interest rate is determined by the Bank of England Base Rate.

3. How much will my mortgage payments be?

Monthly mortgage payments are calculated by the amount you wish to borrow, the term over which you intend to pay it off and the interest rate on your mortgage product. When looking around for mortgage deals, there are free mortgage calculators online which can work out how much you are likely to pay per month (including any mortgage fees).

4. What is an LTV ratio?

The ‘Loan to Value’ ratio is a percentage which is calculated by amount you need to borrow, divided by the value of the property and then multiply the result by 100 in order to get its percentage value. The amount of money that you put down on a property as a deposit will help to lower your loan to value ratio.

5. How much deposit do I need to secure a first-time mortgage?

There is no set rule on how much deposit is needed to secure a first-time mortgage. The more you can set aside for a deposit in savings will put your mortgage application in good standing for the best interest rate deals. Deposits in excess of 25% of the property value will generally allow for better mortgage interest rate deals, so if you have a property valued at £200,000 a 25% deposit would be £50,000. If you have a low deposit, there are ways to help you secure a mortgage including special family mortgages whereby you put in a smaller deposit amount (i.e. 10%) and a family member/guarantor adds in savings to make up the rest of the deposit. There are 95% mortgages deals which only need a 5% deposit, however, be prepared to pay a higher interest rate.

6. Family members are helping me contribute to a property deposit – does this mean I will be automatically approved for a mortgage?

A gifted deposit does not automatically entitle applicants to a mortgage agreement. Banks and building societies take many factors into account when processing a mortgage application including age, employment status, affordability tests, consideration of any existing debt (including credit cards), monetary commitments (including any children/dependents within a household) and credit scores.

7. How does my credit score affect mortgage eligibility?

A credit score is an indication to lenders as to whether you are likely to pay credit back and whether there are any risk implications in lending money to you. If you have a good credit score, you are more likely to have access to better mortgage rate deals. If you have a poor credit history (i.e. any missed credit card payments, late bill payments etc.) this could lead to some lenders refusing you credit. There are free services online including Experian and Noddle where you can check your credit score online and check your credit history to make sure there are no mistakes on your file.

8. What should I do to make sure my mortgage/remortgage application is successful?

Pay your bills on time – if you miss a payment this will be recorded as a negative on your credit file and can stay there for up to 6 years.

Keep your accounts in good standing – make sure you close any unnecessary bank or credit card accounts that are not in use.

Add your rent history to your credit file – if you are renting and always make sure you pay your rent on time, you can request that your rent payments are counted towards your credit report, meaning you could potentially improve your credit score by showing you are a good tenant.

Don’t splash out on unnecessary purchases – mortgage lenders will examine your bank statement history and will question any purchases that are deemed excessive or wasteful. Try to keep to within your living means for at least 3 months before you apply for a mortgage.

9. I already have a mortgage on a property, but would like to sell my current property to buy a bigger/smaller property – what will happen to my current mortgage and how do I secure a new one?

If you plan to sell your property, you can either adjust your current mortgage to the property which you plan to move to or you can remortgage with a new lender, which may offer you a better deal. It is worth speaking with a qualified mortgage broker or directly to your lender to see how moving will affect your mortgage. It is worth noting if there are any exit fees associated with leaving your current lender as you may be penalised for moving to a new lender.

10. Can I ‘overpay’ my mortgage?

Overpayments can be extremely beneficial in reducing the amount you owe on a mortgage. Some mortgages allow for overpayments if you have some extra money that you wish to put towards your mortgage. This can either be in the form of a lump sum or raising the amount you pay monthly. There may be penalties or payment limits which you will need to take into consideration before making any overpayments to your account.

11. Where should I go for mortgage advice?

At Limestone, we have an exclusive relationship with Lewis Christopher Ltd who are able to access 1000’s of mortgage products. Their experience and knowledge of the market is second to none and you can be assured of impartial, whole of market advice. To book a Personal Mortgage Review or find out more information, please visit our Services page.

12. What happens if I do not keep up with my mortgage payments?

If you are experiencing financial difficulty and cannot keep up with your mortgage payments, you need to get in touch with your mortgage lender as soon as possible to discuss your options. Failure to do so could lead to your home being repossessed if you do not keep up with repayments on your mortgage.