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Friday 6 February 2015
Friday 6 February 2015
Friday 6 February 2015
Friday 6 February 2015
Buying your first home can be an unforgettable experience. While the actual process of purchasing a house starts once you have found a property you wish to call home, careful planning can provide a significant advantage. Organising your family finances to ensure you have savings for a substantial deposit, while still being able to afford moving costs, is key to securing the home you truly want.
Bigger Deposits Provide Better Security
Why Larger Deposits Matter to Lenders
In simple terms, a borrower’s deposit is a lender’s safety net. When deciding on a mortgage application, lenders must consider the challenges borrowers may face over the life of the loan. These could include temporary dips in house prices, periods of unemployment, or reduced disposable income (such as after starting a family). The larger the deposit, the less financial risk the lender assumes.
Lower Borrowing Equals Smaller Monthly Repayments
Since April 2014, lenders have been legally required to assess mortgage applications based on affordability. Borrowers who need to borrow less also have lower monthly repayments. This makes it easier for lenders to classify the loan as affordable, increasing the likelihood of approval.
Budget for Moving Costs
It’s crucial to account for all expenses related to moving home. Buyers may need to pay for stamp duty, solicitor and surveyor fees, as well as the cost of moving and furnishing the new property. Unexpected expenses often arise, so having a contingency fund is highly advisable. For example, you might discover necessary repairs or replacements only after moving in. New homeowners also often need to purchase additional household items to settle into their new property comfortably.
Explore Government Assistance Options
Help to Buy Scheme
The Help to Buy scheme supports buyers purchasing new-build homes. If you can afford a deposit of at least 5%, the government can lend up to 20% of the property’s purchase price. This allows buyers to secure a mortgage for only 75% of the property’s cost.
Mortgage Guarantee Scheme
This scheme applies to both new-build and pre-owned properties. It enables lenders to insure part of the mortgage with the government, ensuring repayment even if the borrower defaults. However, both schemes have specific rules and limitations, so they may not suit everyone.
Seek Support from Family Members
Older family members with more established financial positions may be willing to assist. Acting as mortgage guarantors can help young buyers meet lender affordability criteria or compensate for a less-than-perfect credit history. Open discussions with family members can reveal opportunities for support.
Consult a Financial Adviser
Speaking with a qualified financial adviser can help you make informed decisions during the home-buying process. A professional can provide tailored advice, ensuring your finances are in the best possible shape to achieve your goals for your new home.
Important Notes:
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee will be charged for financial advice, the amount of which depends on your circumstances.
For further details, visit the Financial Conduct Authority’s mortgage guidance.
Buying your first home can be an unforgettable experience. While the actual process of purchasing a house starts once you have found a property you wish to call home, careful planning can provide a significant advantage. Organising your family finances to ensure you have savings for a substantial deposit, while still being able to afford moving costs, is key to securing the home you truly want.
Bigger Deposits Provide Better Security
Why Larger Deposits Matter to Lenders
In simple terms, a borrower’s deposit is a lender’s safety net. When deciding on a mortgage application, lenders must consider the challenges borrowers may face over the life of the loan. These could include temporary dips in house prices, periods of unemployment, or reduced disposable income (such as after starting a family). The larger the deposit, the less financial risk the lender assumes.
Lower Borrowing Equals Smaller Monthly Repayments
Since April 2014, lenders have been legally required to assess mortgage applications based on affordability. Borrowers who need to borrow less also have lower monthly repayments. This makes it easier for lenders to classify the loan as affordable, increasing the likelihood of approval.
Budget for Moving Costs
It’s crucial to account for all expenses related to moving home. Buyers may need to pay for stamp duty, solicitor and surveyor fees, as well as the cost of moving and furnishing the new property. Unexpected expenses often arise, so having a contingency fund is highly advisable. For example, you might discover necessary repairs or replacements only after moving in. New homeowners also often need to purchase additional household items to settle into their new property comfortably.
Explore Government Assistance Options
Help to Buy Scheme
The Help to Buy scheme supports buyers purchasing new-build homes. If you can afford a deposit of at least 5%, the government can lend up to 20% of the property’s purchase price. This allows buyers to secure a mortgage for only 75% of the property’s cost.
Mortgage Guarantee Scheme
This scheme applies to both new-build and pre-owned properties. It enables lenders to insure part of the mortgage with the government, ensuring repayment even if the borrower defaults. However, both schemes have specific rules and limitations, so they may not suit everyone.
Seek Support from Family Members
Older family members with more established financial positions may be willing to assist. Acting as mortgage guarantors can help young buyers meet lender affordability criteria or compensate for a less-than-perfect credit history. Open discussions with family members can reveal opportunities for support.
Consult a Financial Adviser
Speaking with a qualified financial adviser can help you make informed decisions during the home-buying process. A professional can provide tailored advice, ensuring your finances are in the best possible shape to achieve your goals for your new home.
Important Notes:
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee will be charged for financial advice, the amount of which depends on your circumstances.
For further details, visit the Financial Conduct Authority’s mortgage guidance.
