First-time homebuyers across the United Kingdom are facing an unprecedented housing market. Mortgage rates are soaring, while house prices remain unaffordable for many. Fortunately, there are several steps that first-time buyers can take to make homeownership more attainable. Here are six tips for first-time homebuyers in the UK’s soaring mortgage market:
- Do your research – First and foremost, it’s essential to understand the current housing market and be aware of any trends or changes that could affect your purchase. Look into average house prices and compare them to your budget to get a better idea of which properties you may be able to afford. Additionally, research potential lenders and their interest rates to find the best deal for your situation. As a first-time homebuyer, you may also qualify for several government schemes designed to provide help. For example, as a first-time homebuyer in England, you can reap the benefits of purchasing a property at up to 50% off its market value with the First Homes scheme. Whether a newly constructed residence by a developer or an existing dwelling from another buyer who purchased via this program, owning your own abode is just within reach. Purchasing a house is also possible through the shared ownership scheme if you don’t have sufficient funds to cover the mortgage payments and deposit for a home that meets your needs. When opting in, you’ll be buying between 10% and 75% of the property’s total market value while also paying rent to your landlord on their share of it. As an additional cost, one should expect monthly ground rent plus service charges, which usually go towards repairs or maintenance in communal areas.
- Save for a deposit – A larger deposit can help to reduce the size of your mortgage and get you access to lower interest rates. Of course, it would be best if you aimed to save at least 5-10% of the cost of the property but having a bigger deposit will make it easier to secure a loan.
- Get pre-approved – By getting pre-approved for a mortgage, you’ll know exactly how much you can borrow and be in a better position when making an offer on a home. Pre-approval will also give you added confidence when negotiating with sellers, as they will see that your financing is already in place.
- Consider all costs – First-time buyers often forget to factor in all the costs associated with buying a home. Don’t just focus on the mortgage payments, but also consider closing costs, property taxes, and ongoing maintenance expenses. Becoming a first-time homebuyer offers numerous advantages, such as having access to the most competitive mortgage rates on the market. Since November 2017, UK buyers have been granted a bonus of qualifying for stamp duty exemption. Specifically, those who met specific criteria do not have to pay stamp duty fees up to £300,000 and only need to pay 5% on properties between £300,001 – 500K.
- Think about future needs – When shopping for a home, think about your lifestyle now and in the future. Ask yourself if this is the right house for your family five years down the line, and make sure there’s enough space to grow into without having to move again soon after purchasing.
- Get professional advice – Buying a home is incredibly daunting, so it pays to get expert advice from professionals who can guide you through every step of the process. A good solicitor will be able to handle all legal aspects of the purchase, while a financial advisor can help you find the most suitable mortgage product.
With these tips in mind, any first-time homebuyer in the UK’s soaring mortgage market should be better prepared to make an informed decision and enter into homeownership with confidence.
