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How to qualify for first-time buyer mortgage

February 18, 2021
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How to qualify for first-time Buyer Mortgage?

Buying your first home can be overwhelming. You need to become a personal finance expert overnight and learn a whole new vocabulary. Buying a home is not an easy process, and neither is it cheap. This is why many first time buyers will flock towards something known as a first-time buyer mortgage.

This type of mortgage makes it easier to purchase your first home, either alone or as a couple. With a first-time buyer mortgage, you may have access to mortgages with a smaller deposit. Some lenders will ask for as little as 10% deposit. Or maybe 5%, if what we hear is right.  Some will accept even less than this or help you to boost your deposit with Government schemes.

Above all else, the first time buyer mortgage category is excellent for those who need a little extra guidance. Your mortgage provider will explain the steps so that you feel confident and empowered every step of the way. Read on to discover how you can qualify for a first time buyers mortgage.

Check your eligibility

Perhaps the most obvious thing to state is that this has to be your first time buying a home. If you are buying with a partner and they have previously owned a home, you would have to apply for the mortgage alone to be able to make the most of any schemes.

To qualify as a first-time buyer, you cannot have owned any residential property in the UK or abroad. You’ll still be eligible if you own commercial property, but only if this property does not have a living space attached.

If you have inherited property or have had property purchased for you, you will be ineligible for a first-time buyer mortgage.

Save for a deposit

The days of 100% mortgages are long gone so you will need to save for a deposit. Use our first-time buyer mortgage calculator to find out how much you could expect to borrow based on your deposit and earnings.

Most lenders will expect you to save at least 10% of the property value. Some lenders will allow less in certain circumstances. How much you can borrow will depend on several factors such as your credit score, your salary, your monthly expenses and the size of your deposit.

To boost the value of your deposit you can use the help to buy equity loan, a lifetime ISA, starter home scheme or the shared ownership scheme. These schemes will all limit the type of home you can buy and the value of the home, so if flexibility is important to you, you will need to save your deposit without help.

Check your credit score

Mistakes on your credit report can quickly derail a first-time buyer application. Sign up to all the major credit checking agencies to find out what lenders can see. If there are errors in your credit report, it’s better to get these fixed before moving forward.

While it isn’t the only factor that lenders will consider, your credit score and report does help to paint a picture of your finances. A checkered financial past won’t hold you back if you are now on track with your finances. But it could mean that you aren’t offered the best interest rates available. This can increase the cost of your mortgage over the lifetime of the loan.

Secure an agreement in principle

To make the process of searching for a home easier, you can apply for an agreement in principle that will allow you to put an offer on a home before going through the final checks. During the coronavirus pandemic, some sellers were asking to see the agreement in principle before even arranging a viewing to help cut down on the number of visitors. This may continue into 2021.

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