While the scheme isn’t just for first-time buyers, it is a positive step forward for those looking to get on the property ladder. It can be very difficult to save up for a large deposit, especially whilst renting, and with the pandemic, low deposit mortgages had been pretty much wiped out.
While this scheme will certainly open more opportunities to help new buyers get on the property market, there are still some important steps to take to make sure you are mortgage ready, whether you’re planning on taking advantage of the scheme or not:
Check you would be able to make the monthly repayments comfortably. It is worth putting together a budget when you start the house-hunting process. Ensure you would be happy paying the monthly mortgage payments, along with other monthly expenditures.
It is also worth remembering the additional costs that come with buying a house, such as surveys and solicitors fees. It is possible to get a Mortgage In Principle from a lender which states you are able to borrow a certain amount of money. Doing this means you go into the process with realistic expectations.
Check with your lender as to whether this would involve a hard or soft check, as a hard check will appear on your credit report, so it is important to keep that in mind.
Be prepared for affordability checks. It is not clear at the moment if affordability checks will be altered for those taking advantage of the scheme, it is best to prepare as best you can. Lenders will likely look at things like annual salary, debts and other general outgoings. It is a good idea to get all your paperwork in order too, things like proof of address will be required.
Take a look at your credit rating as this will impact your eligibility. Check there aren’t any errors on your credit report, get yourself on the electoral role and keep up to date on payments. A low credit score will be detrimental to your application. Being able to show that you can help keep up with payments is a positive sign to lenders and can help improve your credit score, as can paying off outstanding debt and cutting financial ties with people with poor scores.
Enlist the help and support of a mortgage broker and solicitor. With both parties, take the time to look around and talk to a few before deciding.
Mortgages are not one size fits all, it is important to choose one that suits your situation. Think about what repayment structure you might prefer, as well as thinking about the various types of mortgages.
For example, there are fixed-rate mortgages where in which your interest rates are fixed for the duration of the deal, to tracker rate mortgages which tracks the Bank of England base rate i.e. it rises and falls by the same amount.
As with any big financial decision, it is important to take your time to do your research and consult the experts.
