UK house prices have been rising faster than the rate of inflation for a number of years, but the credit crunch has changed that. First-time buyers are able to get on the property ladder more easily provided they have a sufficient house deposit, good credit and decent career prospects.
The Importance of Having a Sufficient House Deposit
Saving enough for a house deposit is the hardest part for any first-time buyer as property has been rising faster than wages for a number of years. The credit crunch has seen UK house prices come down, but saving thousands of pounds is a tough task for anyone.
Quite a few lenders will offer first-time buyers 95% LTV, but many more require a 10-20% deposit in the current climate. There are lenders that will offer 100% loans, provided that parents are willing to act as a guarantor and use their own home as collateral.
Check that Mortgage Payments are Affordable for the First-Time Buyer
It is imperative that a first-time buyer produces a budget so that it is possible to ascertain what is affordable. There isn't normally a huge difference in outlay between renting and making mortgage payments but establishing affordability is vital.
Check the Credit Rating
For a £2 fee, it is possible to order a copy of a credit report. Experian, the leading credit reference agency, also offers people the chance to enjoy a 30 day free trial of their online credit report software.
- Check credit reports for any errors. Any issues should be corrected before making a mortgage application as it will increase the chances of a first-time buyer being accepted;
- Minimise credit applications. These show on credit reports for 12 months and too many applications set off alarm bells for lenders;
- Electoral register. Register to vote as appearing on the electoral register is imperative;
- Close any obsolete sources of credit. This includes old store cards or credit cards that are no longer used.
Get Mortgage Advice from a Mortgage Broker to Reduce Mortgage Payments
Minimising monthly mortgage payments is fundamental during the current credit crunch. Using a mortgage comparison site or mortgage broker helps a first-time buyer identify the best deal to help them get on the property ladder.
A mortgage broker will search the market to identify a package that charges the lowest interest rate and associated fees. They will advise whether it is best to get a fixed rate, tracker or discounted mortgage. All the paperwork is taken care of and they also form a useful source of guidance for the first-time buyer.
It is important for a first-time buyer to be realistic in terms of affordability and raising a sufficient house deposit. UK house prices remain high. Get mortgage advice as it can help reduce mortgage payments and gaining knowledge from an expert is important in the long run.
Those that found this article useful may also be interested in reading about the pros and cons of fixed term mortgages.
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