Buying your first house is a daunting prospect. Most first time buyers will have considerably less money than people 15 or 20 years up the housing ladder, so the thought of ploughing what little they do have into a deposit is understandably a little scary.
Mortgage lenders recognize this fact. They will attempt to capitalize on this trepidation buy offering discounts to entice first timers to put their foot on rung one. Before the recession, you might only have needed a 5% deposit. There were even 100% mortgages being handed out like candy. That’s how attractive first-time buyers are (or were) to lenders, in part because they don’t have any of the problems of selling a house to deal with. They are always the first link in a chain.
Devastating economic meltdown put paid once and for all to such frivolity. Lenders grew reluctant to lend unless borrowers met strict criteria. A deposit of at least 25% is normal again. But listen up first timers: this is a good thing. We got into this mess in the first place because people became too casual about overreaching themselves. Saving up as large a deposit as possible – just like in the good old days – really is the way to go.
And if you can’t afford a mortgage on your own at all, there are plenty of options available. Shared ownership, for example. Shared equity schemes are growing in popularity, but bear in mind, it’s a huge commitment, only to be entered into if there is complete trust on both sides. Get a ‘decision in principle’ from a lender before you start looking for a house. Estate agents will take you more seriously this way, and maybe show you more of what’s up their sleeve. Use a reputable lender that isn’t likely to go bust – Santander is a good place to start looking for mortgages.
Make use of a solicitor or licensed conveyancer. Research all the options thoroughly online, or go on a recommendation from someone you trust. A slow solicitor only drags the process out, making it more stressful and expensive. Go with someone who has a reputation for moving quickly and efficiently. Seek out independent mortgage advice online.
Tempted as you may be to make an aggressively low bid, you’re far more likely to be gazumped. People are very personal about their property. A low bid will only insult the seller, who may refuse your offer out of sheer resentment. Get an independent valuation done.
It’s vital to establish a decent relationship with the seller from the off. Find out if they’re intending to move soon enough for you. The last thing you want is having to move into temporary accommodation for months on end. Stay in touch with all parties – seller, agent, solicitor – once the process starts.