Posted on August 01, 2023 at 3:27 PM
At HomeLink, we know that buying your first home can be tough. That is why we have put together this guide to help you out. We have got loads of properties for sale in Glasgow, Motherwell, Coatbridge, Airdrie, Wishaw, Bellshill and Hamilton - from brand new builds to more traditional homes. We have been around since 2005, and as a real estate agent, we have helped loads of people find their dream home. Our expert mortgage advisors are on hand to give you all the advice you need.
The first question is – Is a mortgage right for me?
The very first step in buying your own first home is finding a suitable lender which can help with you find a home within your budget. This requires you to have a good credit history – checking your score can give you an understanding of your likelihood of what mortgages you could be accepted for.
Experian are the UK's most trusted credit score, and their scoring will help a first-time buyer see the likelihood of being accepted for credit (Experian, 2023). Here is a breakdown:
Excellent (961-999) – Highest chance of being accepted for the best mortgage with a lower interest rate.
Good (881-960) – Fair chance of getting most of the best mortgage deals but will not meet the criteria for all.
Fair (721-880)– You will still be able to get a good mortgage at this level and will still be able to find fair interest rates.
Poor (561-720) – You may be able to obtain a mortgage but with a high-interest rate.
Very Poor (0-560) – Higher chance of being declined for a mortgage, if accepted it will have a very high-interest rate.
Check out What Is A Good Credit Score? | Experian
No credit score is different from poor credit; however, this means you have no credit history for lenders because you have never opened a credit account. This results in lenders having no means of calculating your ability to pay back your mortgage, often no credit is treated as poor credit from the standpoint of lenders – which can lead to rejection of your credit application. So, if considering purchasing your first home, consider if your credit score is attractive to mortgage lenders?
Affordability of a Mortgage?
The Second step is calculating the affordability of a mortgage. You often need a minimum of a 10% deposit to get a desirable choice of mortgage options. However, some banks offer 95% mortgage deals also referred to as the help-to-buy scheme. Furthermore, you will need at least a 20% deposit of the home's value to attain a good interest rate. The best market deals, the best interest rates and the lowest monthly repayments increase with a higher deposit. You should work out how much of a deposit is available and if there is any option to increase that i.e., a first-time buyer may ask a parent to help increase their deposit. Could HomeLink help you with a Valuation?
For a £150,00 property, with a 10% deposit with a 3.24% interest rate would cost £824.85 a month in the first year and £809.55 in the second year. The total cost for the first two years would be £19,612.8 (fee -free, two-year fixed rates for a first-time buyer with a house purchase price of £150,000 on a capital repayment basis over 25 years).
What interest rate works for me?
Interest-only, fixed-rare, variable rates, standard variable rates, discount rates, a hybrid option and can I overpay? Overpaying is popular as it can decrease the overall amount of debt you pay. This can largely impact the final cost of interest; suppose you take out a loan for 20 years at 4% interest with monthly payments of £1,000. In this case, the total amount you would pay back would be £240,000, and the interest you would pay would be £68,000. If you decide to pay an additional £150 per month, you could pay off your mortgage 3 years and 2 months earlier, saving you £16,500 in interest. It's always worth considering making extra payments if you're financially able to do so, as it can have a significant impact on the total amount you pay back over the life of the loan.
However, this depends on the terms of your mortgage some lenders have a mortgage-capped overpayment allowance. Although, most lenders will allow a minimum payment of 10% of your mortgage balance. The most popular choices are fixed or variable rates.
Flexible mortgage?
Offset mortgages, current account mortgages. There are a few options when considering what sort of mortgage works for you. So, a few things to consider when deciding what flexibility will work for you. The flexibility of your mortgage means your mortgage possessing function to increase or decrease your repayments. The ability to overpay is considered the most important form of flexibility in a mortgage. Usually fixed or discount rates from a lender is based with the premises that you are not going to leave once the offer ends; you will stick with the mortgage and pay more for convenience. If a lender gives you a fixed deal and the rate drops, the lender will not want you to leave as they feel you took the risk, and they want to retain you. This results in many lenders imposing early repayment charges, which attempt discourage you from switching to a new mortgage. This is important to check out before you sign up to a mortgage deal and not every deal with have these penalties in place.
Fees
If you are based here in Scotland, then you will need to consider Stamp duty when taking on a mortgage and fee have soared in the last few years. The highest charge is usually the arrangement fee, apart from stamp duty depending on the price of the home. The house prices are high due to the current economic climate. There are useful tools available to help you navigate the best deal for you, we would recommend the first-time buyers guide by the money savings expert which has an extensive free guide for purchasing your first home and checking out your budget with their mortgage calculator: www.moneysavingexpert.com/mortgagecalc.
Finding a Mortgage Broker or going solo?
Should you make a direct deal or get a mortgage broker? There’s pros and cons for both. Most people opt for having a mortgage broker as deals disappear quickly and brokers are experts in find the best deal for your individual circumstances and budget. If you feel confident to go solo, ensure your do plenty or research and seek guidance as required.
Contact Us
Looking for an estate agent in Motherwell or Coatbridge? Our experienced team is committed to providing exceptional service and helping you find the perfect property or buyer. Find out more about HomeLink and how we can help you buy your new home.
Telephone: Motherwell - 01698 264422
Coatbridge - 01236 700248
