Top 10 mortgage hacks for first-time buyers | WIS Mortgages
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10th May 2024

Top 10 mortgage hacks for first-time buyers

Buying your first home is a landmark achievement that signals a new chapter in your life. For many, it's a rite of passage that comes with a hearty blend of excitement and stress, especially when managing the mortgage. So, to help prepare you for what lies ahead, this article aims to provide you with all the knowledge and strategies you need to make the right choices with your mortgage. We'll cover the top 10 mortgage hacks for first-time buyers in the UK to ensure you're in the best possible position as a first-time buyer.

1. Understand Your Budget

Before you start looking at property listings, make sure you have a clear understanding of your budget. Use online mortgage calculators to get an estimate of what you might be able to borrow, but remember, this is just a starting point. Your actual mortgage offer will depend on your income, credit history, and other financial commitments.

Remember to account for additional costs such as stamp duty (if applicable), solicitor fees, survey costs, and any necessary home repairs or renovations. These can add up quickly and significantly impact your overall budget. By factoring in all of these costs, you'll end up with a much more realistic budget.

2. Improve Your Credit Score

Your credit score is a key metric for securing a mortgage with favourable terms. Obtain a copy of your credit report from major UK credit reference agencies and check it for any inaccuracies or areas for improvement.

Ensure you're on the electoral roll, pay bills on time, and use a credit card responsibly to build a positive credit history. Avoid making significant credit applications in the months leading up to your mortgage application to keep your score as high as possible.

3. Save for a Bigger Deposit

The size of your deposit directly affects your mortgage's interest rate. The more you can save for a deposit, the lower your interest rate could be, saving you thousands of pounds over the term of your mortgage. Aim for a 25 % deposit if you can, as this will provide you with the most favourable terms with lower interest rates.

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4. Research Government Schemes

Looking into the latest Government schemes, as there are plenty of options available. This scheme allows first-time buyers to purchase a new-build home with just a 5% deposit, making homeownership more accessible to people who can't secure high deposits.

Shared ownership schemes enable you to buy a share of a property and pay rent on the remaining share. It's a great way to get onto the property ladder if you can't afford the mortgage on 100% of a home.

5. Get a Mortgage Agreement in Principle

A mortgage agreement in principle can make you a more attractive buyer to sellers and estate agents. It shows you're serious about buying and that a lender will likely offer you a mortgage up to a certain amount. It's also a great way to speed up the process of purchasing a home, so if you're looking to get things wrapped up quickly, this can be useful.

6. Consider the Mortgage Type

Fixed-rate mortgages offer the security of knowing exactly what your monthly payments will be for a set period, whereas variable rates can fluctuate. Consider your financial stability and market trends when choosing between the two.

Most first-time buyers opt for repayment mortgages, where you pay back a portion of the loan and the interest each month. Interest-only mortgages, where you only pay the interest during the term, could lead to lower monthly payments but require a plan to repay the loan at the end.

7. Use a Mortgage Advisor

Mortgage advisors have a wealth of knowledge that can help you navigate the mortgage process as effectively as possible. Working with a team like WIS Mortgages will ensure you get the right mortgage product with favourable terms for your situation. That way, you'll never end up with a bad deal. They can also help you with the application process, saving you time and increasing your chances of approval.

8. Plan for Interest Rate Changes

Consider the long-term implications of your mortgage deal. What happens when your fixed-rate period ends? Can you afford the payments if interest rates rise? Planning for these scenarios can protect you from financial strain in the future.

9. Negotiate the Property Price

The asking price is not always set in stone. Use any issues highlighted in your survey or valuation to negotiate the price down. Even a small reduction can significantly affect your mortgage amount and monthly payments.

10. Be Prepared for the Application Process

Gather all necessary documentation in advance, including proof of income, outgoings, and ID. Being well-prepared can speed up the application process and reduce the risk of delays. The mortgage application process can be lengthy and sometimes frustrating. Patience and persistence are vital as you navigate the various stages from application to approval.

Preparation is Key When Securing a Mortgage

Purchasing your first home is a huge step in your life that requires careful planning and consideration. By employing these ten mortgage hacks, you can navigate the complex home-buying landscape with greater ease and confidence. Remember, every buyer's situation is unique, so it's essential to research, seek professional advice from mortgage advisors like WIS Mortgages, and choose the path that best suits your circumstances.

If you're looking for guidance in selecting the right mortgage product for your needs, please contact our team at WIS Mortgages today.

Frequently Asked Questions

Q. What is the lowest deposit required for a mortgage?

A. Although it's generally a good idea to secure as high a deposit as possible for your mortgage, it's good to know the minimum deposit required. For most mortgages, this is 5 %, which means you'll need to have a deposit of at least 5 % of the property price.

Q. Is it difficult to secure a mortgage as a first-time buyer?

A. Obtaining a mortgage as a first-time buyer isn't necessarily more difficult, but you'll need to ensure you meet all the criteria. This includes assessing the affordability of the mortgage for your circumstances and having a strong credit history.

As a mortgage is secured against your home it may be repossessed if you do not keep up the mortgage repayments.