Mortgage price cuts have created more favourable conditions for first-time buyers in 2024. If you are making the move, senior mortgage broker, Sonya Matharu, has some top tips to prepare you for what lies ahead
If you are a first-time buyer waiting to make your first move, then 2024 could be a great time to take a leap onto the property ladder.
January has shown promise for first-time buyers thanks to falling mortgage rates and a slight house price correction – my colleague Gemma Bennett has explained more about this in the first part of this feature, here.
But whilst Gemma has been looking at the question of ‘when’ to buy your first home, I want to help look at the ‘how’.
There’s no denying getting a mortgage and purchasing a home can feel like a complex and daunting process—even more so if it’s your first time doing so.
But there are steps you can take to make navigating the process feel a lot less overwhelming.
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Evaluate your financial position
When it comes to our finances, there are numerous variables which can have an impact on our position for applying for a mortgage.
For example, how much you have saved, whether you’re employed or self-employed, how stable your job or income is, how much debt you have and what your credit score is like.
If you are applying for a mortgage, stability is key, as lenders want to ensure you can both afford the mortgage and keep up with the repayments in addition to utilities, insurance and maintenance costs—so understanding your financial position is absolutely vital.
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Discuss the right time to buy
In life, they say less is more—but with a deposit, the opposite is true. Because the more of a deposit you have available, the more benefits become available to you.
Mortgage products often have a set criteria for eligibility, to help minimise a lender’s risk, and so when you have a higher deposit figure, you can unlock more mortgage products and preferential rates.
Of course, there are other considerations, such as credit score etc. But because of this, it’s important to evaluate the best time to buy. Is it now, or would your options be more favourable if you saved for another six months and increased your deposit?
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Understand your buying power
We all love to daydream – who hasn’t searched for properties for sale on Rightmove, hit ‘no max’ and switched the price filter to sort from highest to lowest?
But, for the majority of us, this isn’t how we find properties we can buy.
Speaking to a mortgage broker (regardless of whether you’re ready to buy now, or years down the line) will always be the best way to evaluate your affordability and understand what purchasing power you have in more detail.
They will be able to let you know what you need for a mortgage, in terms of deposit, repayment rates and fees such as insurance etc in addition to what type of mortgage products and rates will be available to you. This will help you to understand your finances and plan in more detail.
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Compile your paperwork – and stay on top of it
When you start the process of looking into mortgages, you will be faced with a fair amount of paperwork.
The first part you’ll want to get organised is your credit report— this will enable you to understand your purchasing power (not just in mortgages, but in day-to-day life) and will help you to spot any signs of identity fraud (meaning you can put an end to it quickly if something were to happen).
Close down old accounts that no longer work and keep an eye on your payment history and financial health.
In addition to this, there will be application forms, insurance forms, bank statements (usually three to six months and those credit checks.
This paperwork is to demonstrate you understand what you’re getting yourself in for, and can manage your money well. In other words, it will show you have regular income and outgoings, not going into unauthorised overdrafts and having funds left over at the end of the month —it’s not snooping on your takeaway food habits!
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Work collaboratively with your broker
Mortgage brokers have access to a variety of lenders across the market, which means they can access different lenders, products and options to suit your requirements. These are often more favourable than if you go to a bank directly.
This means, regardless of whether you’re starting to save so you can buy in the future, or you’re ready to take the plunge now, you can stay up to date with the most recent information so you know exactly what’s needed from you.
What’s more, you will receive more tailored advice and help on things such as first-time buyer benefits, government schemes (e.g., the First Homes scheme, Shared Ownership and Deposit Unlock) and getting your Agreement in Principle when the time is right. Then you can start putting offers in place.
Sonya Matharu is a senior mortgage broker for The Mortgage Mum
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Connect with The Mortgage Mum team
You can connect with Sonya via her website www.sonyamatharu.com and you can contact Gemma via email Gemma@themortgagemum.co.uk: or at her website, here.
gemmabennett_themortgagemum.co.uk
https://www.instagram.com/sonyamatharu_/
Gemma Bennett _The Mortgage Mum
https://www.facebook.com/sonyamatharu
Gemma Bennett
https://www.linkedin.com/in/sonya-matharu-349265182/
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