Getting on the property ladder: tips from a mortgage expert

4 min
Important to know

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Buying your first home could be challenging and you may not know where to start from.

The deposit is what ultimately determines the rates you pay on the mortgage

You will typically need to have at least 5% deposit for a residential Mortgage.

You could even be a first time buyer First time landlord and pay a property purely for investment and to gain rental income while living with your parents. For a buy-to-let (BTL) property you would require at least a 25% deposit because it comes with a higher risk to the mortgage lender.

Also, the more deposit you put the better the rates are on any Mortgage.

Remember stamp duty, even if you are  first time buyer

If you are a first time buyer and buying a residential property more than 425k you will have to pay stamp duty. If you are purchasing a BTL property there is no stamp duty up to 250k for first time buyers. There are other costs involved that you will need to factor in, such as; conveyancing fees which could be up to £2000. Depending on the type of valuation you wish to get done, this could also cost up to £600. You should also factor in any renovations that you may need to do at the property and if you will need to pay for any removal vans etc.

Options for where to save for a deposit 

If you are planning to buy in a few years time, you could look at opening a Lifetime ISA, which would give your deposit a boost. The government will add a 25% bonus to your savings. You are only allowed to use the balance of the LISA towards your residential property or at retirement age. If you decide to close it due to any other reasons or earlier than retirement, you will lose your government bonus, plus an additional 6.25% off your own money. The Help to buy ISA has now been closed, however if you opened you HTBI before Nov 2019, you will still be able to claim the government bonus until 2030.

Schemes that may be available to help buy your home

Finding out about different schemes to see if it is a option for you. There are a few options, such as:

  • Governments First Home scheme- This allows you to buy a New build property only with 30% discount. The requirements for this scheme is that the maximum property price outside of London must be 250k and within London must be 420k. You will have to take out a Mortgage of at least 50% of the property price.
  • Shared ownership- You can purchase a percentage of the property based on what you can afford and pay rent on the remaining share. The minimum share you can purchase is 20%.
  • Guarantor Mortgage- Where a family member used their savings or property to guarantee the payments and cover the affordability that you fall short on.
  • There is a option to look at a 100% Mortgage if you do not have any deposit- You would need to show proof of 12 months rental payments to a Landlord and your affordability will be based on the rental payments you have been making so far.

Next steps to get you ready to apply for a mortgage with confidence

The next step should be to find a broker and see how much you can borrow. Every lender has different affordability criteria and a broker could check which lender could lend you the maximum amount of money, even that extra couple of thousand makes a big difference to be able to purchase the home of your dreams. Check your credit file, most lenders usually check Experian or Equifax and make sure your credit is worthy. Check if you are registered on the electoral roll, if not that is an important factor before applying for a Mortgage. Having short term borrowing such as credit cards can help build your credit score, but try not to spend more than 25% of the credit limit and clear the balance in full every month. Having utility bills or council tax is also a great for your credit file.

Before you start looking for a property and attending viewings the best option is to get your broker to arrange the Decision in principle for you. This would mean you have passed a soft search and it will give you the correct indication of the amount you can borrow. Once you then find a property and attend viewings, if you take your Decision in Principle certificate with you it makes you come across as a serious buyer who has a Mortgage and a broker ready and your offer is more likely to get accepted. It would also avoid any delays once your offer is accepted. Your broker will then go through a Mortgage recommendation based on your circumstances.

Once your Mortgage application has been submitted and you get your offer, the conveyancer then starts all the legal work and to complete on your property can take on a average between 12-16 weeks. At your Mortgage Experts, as your personal broker we support you throughout the full journey. We guide you through the process, look for resolutions to all your problems and any barriers you face. We follow up with your conveyancer till you complete and have the keys to your new home.


Mortgage Expert

Shapla is a Mortgage and Protection Specialist with years of experience helping people with their mortgage and protection needs. Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through our advisors' wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that people have come to rely upon for all their mortgage and protection needs.

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