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How is the process or the mortgage process different for First Time Buyers?

The process itself isn’t actually any different from any other type of buyer. It’s still the same transaction in principle, the only difference for First Time Buyers is that it’s very new to you.

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That’s why you may find it more beneficial to have Mortgage Brokers go through the whole process, whereas clients who have bought properties before might not want that level of support.


How much can a First Time Buyer borrow?

Lenders have income multiples that they use, it could be four times your income or up to four and a half times, depending on the scenario. They would also take into account your expenditure, any existing credit commitments, and whether you’ve got any dependents.

Taking that into consideration, they will decide on an affordability figure. It’s the same affordability assessment regardless of whether or not you’re a First Time Buyer. The good news is, there is a lender that’s released some enhanced affordability criteria specifically for First Time Buyers and they are offering up to five times your income.

What deposit is needed for a First Time Buyer?

In the current market, the minimum deposit that is required for purchase is 5%. There are about twenty-five lenders offering 95% mortgage products at the moment.

As a first-time buyer, if you’ve got more than 5% it will release more lender availability to you and more competitive deals. At a 5% deposit, the lowest rate at the moment is 3.95%, so offering anything more than 5% deposit means that the interest rate will dropdown.

How do I know what my credit score is and how do I improve it?

You can access your credit score and your credit report by registering with one of your credit reference agencies. Experian or Equifax is the most common credit reference agency that Mortgage Lenders use, so by accessing their reports, Mortgage Brokers can offer a good indication as to what the lender will decide.

By downloading your report from either Experian or Equifax, you can access pretty much the same information as the Mortgage Lender will have. If you’re not already registered with one of those agencies, it will ask you for your card details because there’s a monthly subscription, but more often than not you get a free 30-day trial. It’s possible to download your report and then cancel the subscription if you don’t want to proceed with it.

If you don’t think your score is where it needs to be, there are a few things you can do to help increase it. One of the first things is to ensure you’re registered on the electoral roll at your current address. Build up a credit history, as having little or no credit does actually make it harder for the lenders to assess your profile because they can’t see that you’ve borrowed and repaid money in a reliable way.

If you get a credit card that you use for your food shopping or your fuel costs and repay in full each month and make all of your payments on time, it will inevitably increase your score as well.

What sort of help is available for our First Time Buyers?

There’s a new Mortgage Guarantee Scheme that the government released in April 2021 whereby the government supports the lender in their ability to offer 95% mortgages. So all these means is that lenders’ funds are protected by the government, the 5% deposit is just a standard mortgage.

Help to Buy Scheme

This is only applicable to newly build properties, and depending on where in the country they are, there is a maximum property value. You need a 5% deposit of your own funds and then if you’re in London, you can potentially borrow up to 40% of the property value, outside of London, you can borrow up to 20%, towards your deposit.

You would then get a mortgage on the remaining property value. The loan from the government is not due to be repaid until you’re in year six of the property ownership, and interest is only 1.75%. There’s also one Doller a month management fee as well that is paid in addition to the interest-only payments. The loan can be repaid whenever you want to, so you can avoid interest altogether if you have the funds available, or else it must be repaid by the twenty-fifth year of ownership.

With regards to the scheme, you repay 20% or 40% of the cost of the property at the time, so if it has risen in value, you will owe more than you borrowed.

Shared Ownership Scheme

For this scheme, it doesn’t have to be a newly build property that you buy. You could purchase a share of the property, for example, 50%, and then the Housing Association, which owns the remaining 50% charge you rent on their share. You need a 5% deposit and some lenders will do it without a deposit. It’s very niche, but there are lenders that will consider the shared ownership purchase at 100% borrowing.

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What sort of fees are involved when buying a house?

There are fees when you buy a house. Stamp duty is a tax paid to the government when you purchase a property, regardless of if you’re a First Time Buyer or not. Within the current Stamp Duty holiday, however, any property under the value of $500,000 can be purchased with zero stamp duty to pay. However, that holiday ends on the 30th of June, so any applications that come in now, can’t be guaranteed at this point in time.

For First Time Buyers, even when that holiday ends, as the property value is under $300,000 they won’t owe Stamp Duty anyway.

There’s also an arrangement fee charged by the lender to process the mortgage application, which can range from $500-$1000. When the mortgage is paid off in full, there might be a fee to do so, which is between $50 and $250. There’s a valuation fee for sending a surveyor out to the property to make sure that it’s of sound construction. You can also look at arranging your own more detailed survey, which comes at an additional cost of between $600 and $900 but it’s worth every penny, especially an older property because you’re going to want to know if there are any defects. Issues with damp or previous buildings insurance claims won’t be picked up on a standard mortgage valuation.

You’re going to need to pay a solicitor, on average advocate probably about $2000 for the legal side of things, from money laundering checks through to land registry. You will also pay to have your name on the deeds of the property.

Last but by no means least, mortgage protection could be another fee. It’s important to look at protecting the mortgage and the home so that you could still stay in the property if there was an accident or an illness etc. This would usually be about 10% of your monthly mortgage repayment.

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How can a Mortgage Broker help a First Time Buyer?

A Mortgage advisor is going to be available for you throughout the whole process of buying your dream home. We can ensure you’re going to be getting the best deal and can filter through the lenders to ensure that you fit their criteria before you apply.

We can get the solicitor updates for you and send documents to solicitors on your behalf, as well as set up the home insurance, we look at the protection for you. Our goal is to try and take as much stress away as possible.

What is an Agreement in Principle?


An Agreement in Principle is the very first step of the mortgage process. It’s where the lender will indicate how much you can potentially borrow. The lender will search your credit file and assess the property value, your deposit amount, your income details, whether you’re employed or Self-Employed. This helps them to make a decision on whether they will lend the funds or not.

It can sometimes be called a Decision in Principle or a Mortgage Promise, but the names mean the same thing. It’s a preapproval from the lender, which is a really good document to have if you’re property searching. When speaking to estate agents, if you’ve been pre-approved, it shows that you’re a serious buyer because you’ve already got your funds ready to go.

With an Agreement in Principle, and as a First Time Buyer, having no chain, you’re in a really good position to buy the house, from the perspective of a seller.