Best Mortgage Deals
Advice, help, information and guidance on the best mortgage deals available

Best Mortgage Deals - First Time Buyers

best mortgage deals by AnnaBuying your first home can be both exciting and daunting and finding the best mortgage deals at the moment can be equally overwhelming. Yet without first time buyers entering the market, the property market will fall further than many expect.

With the average property now valued at 7 to 8 times average earnings, is it any wonder that first time buyers are few and far between. If I were in this position now, I certainly would not be thinking of buying at the moment. As I said earlier - rent if you can, and wait until two things happen. Firstly wait for prices to fall, and secondly wait for money supply to re-enter the market which will reduce interest rates accordingly. 

Best Mortgage Deals - A Guide For First Time Buyers

Not so long ago lenders loved first time buyers, and they often got the best mortgage deals. How times have changed! Gone are the 100% or even 125% mortgage deals, loan advances of 5 or even 6 times earnings, and the small deposits of 5% to 10%. So as a first time buyer what should you do before looking for the best mortgage deals. I have listed my top tips which I hope will help you in your search. These are only my own personal suggestions, and I am not going to say it is easy at the moment, and at the risk of sounding boring, I would urge you to consider renting as a short term option before buying.

Tip Suggestions
Your deposit In simple terms the greater your deposit then the better the mortgage deal you will be able to find. Try to aim for a minimum of 10% if possible as this will give you more options with the lenders
Mortgage types Do your research on the internet. Hopefully this site will help a little. Understand the different types of mortgages available, and the pros and cons of each type. Try to think ahead a little, not just about your circumstances today or tomorrow. ALWAYS read the small print, and if you don't understand anything then ask. Apply to one or two  lenders and obtain in principle offers - they are not binding and will not cost you anything. Don't do this too often as it may affect your credit history if lenders are requesting information about you frequently. When you start your house hunt take these with you as they show you are serious.
Looking for your first home Start your research on the internet which will give you an idea of the prices in each area for particular types of property. It's a cliché I know, but location is important. It's better to buy a smaller house in a desirable area, rather than a larger flat or house in a less desirable one. Desirable means, schools, transport links, safety, shops, etc. Check out schools in the area, even if you don't have children yet - when you come to sell your property buyers will certainly consider this if they do. If you can't afford the most desirable area, look for the ripple effect of an area nearby which will be pulled up as buyers ripple out. Particularly look for an influx of coffee shops, up market restaurants, and pavement living - it's a sign the area is moving up and probably a good investment. If you are tempted by an auction, go first with no intention of buying, just to get the feel for it. Sadly there will be many bargains to be had as re-possessions soar and auctions are often where the lenders sell these properties to turn them into cash quickly. Go with a budget and stick to it - and remember once the hammer comes down you have bought the property. You will be required to pay your deposit immediately and complete in 28 days, so make sure you have the funds available and ready.
Estate agents DON'T be put off by the agent who says " you won't find anything for that budget round here" - they all say that no matter what your budget or where you are buying, so don't be put off. Remember it's a buyer's market at the moment so negotiate and don't fall in love with a property before you've bought it - try to see it as more of an investment. Make some silly offers - you might be surprised someone may be desperate - if you put in 19 offers, the 20th may be accepted, so keep trying and don't be embarrassed. Remember you are in a very strong position as a first time buyer with no chain.
Stamp duty Just call it property tax, which is what it is! - if the property you are buying is less than £125,000 then you don't pay any stamp duty at all. Between £125,001 and £250,000 it's 2%, £250,001 to £500,000 it's 3%, and above this it rises to 4%. Remember there are some areas of the UK that are designated as disadvantaged, and in these areas stamp duty starts at £150,000, so it might be worth checking on the Government's site. Remember it's not a sliding scale, so if the purchase price is £130,000 you pay 1% on the full amount ( not on the £5000 over the threshold) - there are parts of the UK where you can still by a flat or house for under the threshold.
Fees You will have several sets of fees so please make sure you budget for them. Legal fees should be no more than £400 to £600 - I normally pay £525 plus VAT in London. Your solicitor will also execute a search which checks planning applications which may affect your property - this normally costs around £350 and can take a few weeks depending on the Local Authority. Now mortgage arrangement fees vary enormously and this is where you need to shop around for the best mortgage deals, but remember there is no such thing as a free lunch. If the lender has waived the arrangement fee, or offers a very reduced fee, then I guarantee it will be built in somewhere else - so check the small print. Some lenders offer no, or low arrangement fees for first time buyers particularly, so check for the best mortgage deals at the time.  In general arrangement fees vary from around £500 up to £2,000.( you can generally wrap this into the capital borrowed) Once you have an offer accepted your lender will want to carry out a survey ( this is not the same as a full structural survey, but a valuation survey - the lender is checking that the house has the value you or the agent say it has!!) - this wonderful survey will cost around £150. Finally you may want to have a full structural survey which will cost anywhere between £500 and £750 - is it worth it? - I have bought many properties without one myself, and also paid for surveys which have been of no value whatsoever since there are so many caveat's that any comeback on the surveyor is useless, as they generally deny liability saying that the problem could not have been foreseen - it's a touch choice and one only you can make.

 

In summary, if I were looking now, I personally would be going to the auctions in the area I was looking to buy, just to get a feel for the prices and to see how many repossession were being sold. This is what the professional buyers will be doing right now. Another way to find a cheap property is to look for signs of a probate sale -the house or flat will be looking tired and the beneficiaries of the will may be looking for a quick sale - also ask the agents if they have any probate properties on their books and put in a silly cash offer - you may be surprised. As you can see it's not just about finding the best mortgage deals, there's a lot more to it than that!

Now let's look at how to approach the mortgage market for the best mortgages deals if you have a poor credit history.

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