Purchasing a home is one of life’s greatest milestones. Whether you are a long-term renter or are flying the nest for the first time, it is the product of years of hard work.
But with so much to familiarise yourself with ahead of time, it can be overwhelming. If you are looking to take your first step onto the property ladder, continue reading for 5 tips to increase your chances of joining the first-time buyer club.
1. Improve your credit score
To improve your chances of purchasing a home, you must improve your credit score. This is one of the first factors mortgage lenders will consider when assessing your application. They will analyse your borrowing habits and history and use this information to decide whether or not to offer you a mortgage. Your credit report can be accessed through a credit reference agency.
There are several ways to improve your credit score. You must always repay debts on time, close credit card accounts you no longer use, and register to vote on the electoral register. If you have never borrowed before, now is a great time to take out a credit card and pay the balance in full each month.
2. Consider available government schemes or loans
Taking your first step onto the property ladder is one of the most difficult things you will ever do. As a result, there are several government schemes and loans available for first-time buyers depending on the country you wish to buy in.
A home loan, for example, is a sum of money offered from a financial institution or a bank to assist with the process of buying a home. They can be offered for homes under construction, private properties, condominiums, and resale HBD flats. With a Citibank Home Loan, for example, homeowners can choose between a fixed interest rate of a floating rate mortgage package.
3. Save a bigger deposit
In such a volatile property market, low-deposit mortgages are few and far between. By saving a bigger deposit, you can increase the chances of your mortgage application being approved first time. It may still be possible to secure a mortgage with a 5% deposit, but most mortgage lenders now require as much as 10% or even 15%.
For example, if you want to purchase a property costing £200,000, you will need to save £10,000 for a 5% deposit, £20,000 for a 10% deposit, and £30,000 for a 15% deposit. It is also worth noting that a bigger deposit can equal smaller monthly repayments and better mortgage deals. It will also improve your chances of being accepted first time.
4. Choose the right time to buy
When it comes to buying your first property, there are no golden rules. There are, however, a number of factors you make take into consideration when it comes to choosing the right time to buy. You must not rush. Taking the time to ensure your finances are in order ahead of time will reduce your chances of being rejected at the first hurdle.
Before you apply, you must have accumulated enough savings and researched the different types of schemes and loans you may be eligible for. While assessing your application, mortgage lenders must be confident you will be able to afford monthly repayments.
As a result, your credit score must be high, and you must be settled in a full-time job. If you have recently started a new role or changed industry or sector, wait until you have passed your probation period or are confident you will continue working there for a prolonged period of time before applying.
5. Talk to a mortgage broker
There is so much information to familiarise yourself with ahead of purchasing your first home. There is, however, professional help at hand to streamline the entire process.
A mortgage broker, for example, can provide you with invaluable help and advice relating to your finances and the different mortgage options available to you. They can be especially helpful for first-time buyers with exceptional circumstances. This may include one or more buyers being self-employed, prospective buyers with a small deposit, or complex credit issues.
Mortgage brokers also benefit from working closely with mortgage lenders to find the best mortgages for first-time buyers. They can also act as an intermediary between a lender and a borrower to ensure you get the best deal available to you.
As a first-time buyer, there is a lot to learn. By familiarising yourself with as much information ahead of time, you can ease any worries or anxieties and streamline the entire process.
There are a number of steps you can take to improve your chances of being accepted for a mortgage and purchasing your first property. They include improving your credit score, considering available government schemes or loans, saving a bigger deposit, choosing the right time to buy, and talking to a mortgage broker.