Advice for first time buyers

Being a first time buyer in the UK housing market these days can be really tough. Rising house prices coupled with increased interest rates and rising inflation has made home ownership difficult for many aspiring first time buyers. However, with predictions that house prices are likely to start falling as the year goes on, along with predictions that the interest rate will start to fall before the end of the year, it seems as though things might be easing up for first time buyers in the UK, with the chance to enjoy greater access and increased affordability when it comes to purchasing a property.

Purchasing your first property is extremely exciting, yet at the same time it can be very daunting. This is a huge financial commitment for first time buyers, and therefore it is important to take a number of factors into consideration rather than rushing into purchasing a property. There are many decisions that you have to make and some real hard core budgeting that needs to be done before you take that all important step into the first rung of the property ladder, so you need to be prepared to put in some hard work before making any commitment.

Work out your budget: You need to make sure that you can afford to get a mortgage for a property before you start looking, and with the rise in property prices over recent years this can be increasingly difficult for a first time buyer with no equity. However, you will find that some lenders offer higher income multiples these days, although you should take care not to financially overstretch yourself otherwise you could find yourself struggling to keep up with mortgage repayments in next to no time. Once you know how much you can borrow you can start looking for a property that fits in with your budget.

Take into account other fees and payments: You will need to have some upfront cash available before you make your purchase, even if you intend to opt for a 100% mortgage where no deposit is required. This is because there are a number of other costs involved in property purchase, such as valuation fees, solicitor fees, and removal costs, all of which can add up to a tidy sum. You may also want to pay for unbiased independent financial advice to ensure that you get the right mortgage, which can also add to the cost.

Work out which mortgage will best suit your needs: Mortgages can be a real minefield these days, with a wide range of mortgages on offer, all of which can cause confusion to the first time buyer with little or no experience in this area. Often first time buyers decide to opt for a fixed rate mortgage so that there is some level of financial stability for the first few years, particularly in light of the recent interest rate rises. However, if you are confused about which mortgage to opt for spend a little on getting independent financial advice, as this could save you a fortune over the long term as well as offering the peace of mind that you have a mortgage that truly suits your needs and circumstances.

Work out your income and outgoings: Although getting a mortgage and finding a home can be difficult and stressful, there is more to come. You also need to ensure that you can comfortably afford the repayments, and in order to do this you need to work out your total income and outgoings. You will need to take into consideration household bills, day to day living costs, travel costs, grocery shopping, any insurance policies that need to be taken out, and of course the cost of your mortgage repayments. If you are opting for a variable rate mortgage you need to ensure that there is enough flexibility in your budget to cope with repayments in the even that interest rates go up.

Minimizing on repairs: As a first time buyer it can be difficult to know what to look for when you go to view a property, and you could well end up wasting your time on a property that will end up costing you a fortune in repairs. Therefore it is advisable to take someone with experience, such as a qualified surveyor, along with you to save you the hassle and expense of ending up with a property that needs lots of repairs on it.

Always remember the risks: As a first time buyer you may not be aware of the risks associated with home ownership. However, you should always remember that failure to keep up with repayments on your mortgage could result in the loss of your home, and therefore you should ensure that you are comfortable with the mortgage product and the repayment on your mortgage before you make any commitment. Also, if you opt for a 100% mortgage you should bear in mind that you could slip into negative equity in the event that house prices fall, which means that you would owe more on your property than it is actually worth. Therefore, if you can afford to put down a deposit, even if it is only 5%, then you should do so.