If you are a first-time buyer, you might feel as though the current landscape is not set up for your success. With a rising cost of living and expensive mortgages, there can be significant stress surrounding the purchase of your first home. In this article, we will look at some of the key questions about first-time mortgages and how you can go about getting a foot on the property ladder.
A first-time buyer is, predictably, someone who has never owned a property before. This tends to be younger people who are looking to move out of their parents home to live alone or with a partner or friend.
First-time buyers could potentially get a mortgage with just a 5% deposit, depending on whether they meet certain criteria. There are also certain government schemes that allow for 5% deposit and low-interest mortgage offers exclusive to first-time buyers.
This depends on a number of factors, some of which will be personal to the buyer. However, the longer the term, the lower the monthly payments, which might be an attractive option for some. For example, a 25-year term would mean higher monthly repayments but the ability to potentially pay it off sooner, whereas a 40-year term would mean lower monthly repayments but you would likely pay it off closer to retirement age.
The government’s First Homes scheme can help first-time buyers in England secure a home for 30% to 50% of its market value. The property can be a new-build from a developer or it can be purchased from someone who originally bought it as part of the First Home scheme. You must be over the age of 18, able to get a mortgage for at least half of the price of the home, and have a household income of less than £80,000. You could also opt for a shared ownership or open a Lifetime ISA to start saving for a home. If you’re from Wales, Scotland, or Northern Ireland, the Own Your Own Home website can help you find the right scheme for you.
In general, the majority of lenders will allow you to borrow around 4.5 times your annual salary, but this can vary depending on the provider. So, if you earn £35,000 a year, you could borrow around £157,500 for your mortgage. If you are purchasing as a couple, you can get around 4.5 times your combined salary – so two people earning £35,000 each would be able to borrow £315,000.
Although it might seem like the odds are stacked against first-time buyers at the moment, there are schemes and help available from a number of sources that may aid you in your search for a first home. The mortgage landscape is ever-changing, so try and keep up-to-date on the news and see when might be the right time to start thinking about getting a mortgage.
