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First Time Buyer Mortgage

Who qualifies as a first-time buyer?

In the UK, a first-time buyer is considered someone who has never owned any residential property anywhere in the world. This means you must not have owned your own home (with or without a mortgage), and you must not have owned any buy-to-let property either. This includes any inherited property.

If buying as a couple, then the definition varies by lender. For example, some lenders insist both meet the first-time-buyer definition, and some only need one to meet the definition.

First-time buyers benefit from specific schemes like LIFT and tax advantageous deposit savings schemes like HELP 2 BUY ISA to make the home-buying process more accessible and affordable.

Lenders often offer incentives for first-time buyers like cashback, waiving lender product fees, family-assisted purchases and gifted deposits. If a first-time buyer's occupation is classed as ''professional'' such as doctors, dentists, teachers, and lawyers, then sometimes lenders may increase the multiple of your income they will lend. Typically a first-time buyer can borrow around 4 to 4.25 times their annual salary. A lender who offers a professional mortgage may lend as much as 5 or even 5.5 times their yearly salary.

How do first-time buyer mortgages work?

You'll need a deposit as you don't have a property to sell and equity to put down as a deposit. However, we encourage clients to put down as big a deposit as is realistic for their needs and circumstances.

The days of 100% mortgages where the lender lends the entire cost are long gone, but a few lenders will lend up to 95% of the home report value. Most will require at least a 10% deposit, some a 15% deposit. Generally speaking, the bigger your deposit, the lower your interest rate.

First-time buyers need to understand that the lender's maximum loan calculation is based on the purchase price or the home report value, whichever is the lower. This can cause issues for a first-time buyer when competing for properties and looking to bid over the home report value. Let's say the maximum loan is 90%. The home report value is £100k, and you bid £120k. The lender will only give 90% of the £100k and not 90% of £120k. In this scenario, you will borrow £90k, and the £30k difference has to come from the purchaser.

Where can I get my first mortgage?

You can see your bank or building society, but you may not get detailed advice, only information. Also, the mortgage products will only be from that one bank or building society.

Price comparison sites sometimes feature mortgage deals of the day. However, the challenge with price comparison sites is that there is no advice. The lender will have paid the site a fee for them to have their deal featured and whether you qualify for the mortgages listed is a complete unknown.

By far, the best way to get your mortgage is through a Mortgage Broker and, ideally, an independent whole of market broker. That way, you can get genuine, impartial advice as the broker works for you, not the lender. Being independent means selecting the most appropriate mortgage based on each client's unique circumstances.

At Greenshoots Financial, we check a client's affordability and credit position before someone even starts looking for a home. Hence, they have a degree of certainty about whether they can get a mortgage or not. We also liaise with the estate agent, the solicitor, the house builder if it's a new home and the lender. And, of course, not only do we ''hold the client's hand" through to the day they get their keys, but we also keep in contact throughout their lives to ensure they always have the best mortgage and insurance products for their needs. It's peace of mind and reassurance clients say they value most in us.

What should I know about mortgages as a first-time buyer?

You don't need to be an expert as we take you through everything step by step and turn jargon into plain English for you. First, we get to know our client's circumstances and plans for the future, and from that, we can help determine how many years the mortgage should be over and whether a fixed or tracker rate is most appropriate. Then, for example, we discuss costs and fees and the differences between repayment and an interest-only mortgage.

Will I be accepted for a mortgage as a first-time buyer?

It comes down to three things. First, the size of your deposit, your income and financial commitments and your credit status will determine if you can get a mortgage and on what basis. Generally speaking, if you have at least a 10% deposit, are not looking to borrow more than 4 to 4.5 times your annual income and have a good clean credit record, you shouldn't experience any issues. However, if one or more of these three things aren't quite there, don't worry, as a good Mortgage Broker with access to the whole market may still be able to find a mortgage for you. And if not, we will be honest and upfront and say so, but we will help you make a plan to fix whatever the issue that's preventing you from getting a mortgage right now.

When should I apply for a mortgage as a first-time buyer?

As soon as you decide that you would like to buy your first home and have some deposit saved, you should make an appointment to see an Independent Mortgage Broker. Before you can move forward and start to view properties, you must know what you can afford and that you have a mortgage agreed in principle by checking your affordability and credit status.

What are your top 5 tips for first-time buyers?

  1. Make use of tax-efficient savings plans like help to buy and lifetime ISAs to build up your deposit

  2. Go and see an Independent Mortgage Broker before you start viewing properties to get an Agreement in Principle

  3. Understand the impact on you and your mortgage if making an offer above the Home Report Value

  4. If appropriate, make use of Government Schemes for first-time buyers like LIFT

  5. Be prepared to be flexible with your plans and the types of property you will consider

As one of the largest independent brokers in Scotland, we have helped many to get on the mortgage market. Get in touch today if you would like to discuss how we can help you.


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