Martin Williamson, Head of Residential Property
In fact, there are some strong rays of light emerging: For a start, there are more lenders and products available, especially at higher loan-to-values (LTVs) than there were last year, while mortgage rates are still at historically low levels.
Here are some helpful tips for first-time buyers:
Be prepared
Lenders like to see:
your last three years' address history, with no gaps
your last three months' payslips and your last P60 form or three years' accounts
your last three months' bank statements
full details of any loans or credit cards you have.
Credit history
All lenders want to make sure they are lending money to someone who is highly likely to pay it back.
So it may be worth checking your credit score with a company like Experian or Equifax.
Simple things like paying all your credit cards on time and making sure you’re on the electoral roll at your current address will help.
Deposit
Don’t be put off if you don’t have a sizable deposit for your new home.
According to the financial information service Moneyfacts, there are now 49 mortgages requiring a deposit of at least 5% of the property value, compared with just 24 last year.
Meanwhile, the number of 90% mortgages has increased from 214 to 343 in the past year.
The importance of good conveyancing
The term 'conveyancing' refers to all the legal and administrative work associated with transferring the ownership of land or buildings from one owner to another.
When you buy, sell or remortgage a property, you are advised to use a conveyancer, employed by a firm of solicitors, or a licensed conveyancer, to look after your interests and deal with the complex paperwork.
Your conveyancer will ensure all the legal conditions and obligations are met and the new mortgage goes into place without problems.
Affordability
When buying a property, the primary concern is that it is within your budget and will be a suitable home for you.
You should also only consider an interest-only loan if you have a viable way of repaying the loan, such as savings or the ability to trade down to a cheaper property in the future.
Agreement in principle
To make sure you have the best chance of buying a home, securing a mortgage ‘agreement in principle’ (AIP) first is a good start.
This AIP can then be used to confirm to the vendor your creditworthiness, and that you are a serious bidder.
Shared ownership
Shared ownership involves housing associations allowing you to buy a percentage share of the property, say 50%, while paying rent on the balance.
Alternatively, purchasing with a friend or two may let you pool your resources.
In summary, while the property market is still very difficult for first time buyers, there are options available for those who take the time to research the market and get the right advice.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 50 people serving private and corporate clients. For further information:
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