First-time buyer tips
It can be daunting to search and apply for a mortgage if you have never bought a property before. There may be terms you’ve never heard of or parts of the process you never knew existed. If you’re planning on buying your first home this year, we have put together three of our top tips to help you along the way. These tips could save you money and make your journey less stressful.
Tip #1: Seriously consider if a mortgage is right for you
Before you start browsing properties for sale, start by asking yourself if you really want a mortgage right now. If a mortgage is going to stretch your budget and reduce your quality of overall living, it may be better to save up some more and hold off for now. If you can continue to rent and save each month, you will be able to put down a bigger deposit and possibly receive cheaper interest rates.
You can get an idea of how much a mortgage will cost by using an online mortgage calculator. Note, these use representative interest rates only and are not always accurate. And you’ll also need to consider additional costs, such as legal fees and stamp duty.
Tip #2: Work on your credit score before applying
The interest rate you are offered will depend on a number of factors, not limited to the size of the loan, your income, existing debts and your credit score. If you know that you’ll buy your first home in the next 6-12 months, it’s a good time to start working on your credit file.
Here are some ways to improve your score:
- Check it for free and look for mistakes. Having errors removed will quickly boost your score.
- Put your name on the local electoral roll. Doing this will slightly improve your score because it verifies your identity.
- Keep up with existing debt payments and clear any arrears.
- Limit your number of credit applications (e.g., for credit cards or personal loans)
Tip #3: Consider using a mortgage broker
Any time you need a mortgage – or any time of loan for that matter – you have the option of sourcing the credit yourself or using a broker. A mortgage broker is someone who helps homebuyers find a suitable and advantageous mortgage for them, and they are often preferred by first-time buyers who may have lots of apprehensions and questions. Using a mortgage broker can make the process easier, help you avoid pitfalls and reduce stress.
Some mortgage brokers do not charge any fees but take a commission when you are approved for the mortgage. These advisers don’t usually search the whole of the market but only consider partnered lenders. On the other hand, you may decide to pay for a mortgage advice service that searches all of the market, increasing your chances of securing a lower interest rate. Sometimes a broker can access exclusive deals.
January 2022
