7 Mortgage Tips for First Time Buyers 2021

02 September 2021, by Matt Stevens

Tip 1: Save Up for a Large Deposit

In order to buy a house, you need to have enough money for a deposit. Usually this is 5%-10% of the house price, however, the bigger the deposit you can put down, the better your mortgage rate will be. 

Your mortgage will be calculated using LTV (Loan to Value). For example, if you are buying a £100,000 house with a £10,000 deposit, your mortgage will need to be 90% LTV. However, if you put down a larger mortgage, your LTV will be less.

So before you start thinking about buying a house and getting a mortgage, make sure you have a large enough amount of money saved up for your deposit. Gifted deposits from immediate family members are also accepted.

Read our deposit guide to find out more.

Tip 2: Make Sure you have a Good Credit Score

You probably hear the phrase credit score an awful lot. It is very important for loans, especially mortgages which are taken out against your home.

In order to ensure you will be able to get a mortgage and good rates, you will need to have a good credit score. This can be achieved through paying credit card bills on time, repaying loans and being on the electoral register. 

There are multiple online services where you can check your credit score for free. If it is not good enough, then you may want to consider speaking with a mortgage broker and getting some advice. Check out our guide on adverse credit to learn more.

Tip 3: Reduce Your Debts

Similar to tip 2, mortgage providers will be disinclined to offer you a mortgage if you have substantial debt. 

If you have debts relating to pay-day loans or credit cards, then mortgage providers will be wary of your financial stability. It is worth saving up and paying off as much of your debt as possible before approaching a mortgage provider.

Make sure you are in the right place to start thinking about buying a home. If you want to learn more about getting a mortgage while you have debt, take a look at our frequently asked questions.

Tip 4: Try and Stay in the Same Job

Financial security is very important to mortgage providers. In order to get a mortgage, you will need to provide proof of income. 

Mortgage providers will want to see that you have commitment to your job and that you will have a steady source of income during your mortgage repayment term. Although some lenders will consider a recently started job, the majority of lenders will want to see a track record of employment and income.

If you are thinking about moving job, or have been given notice, then make sure you raise this with your adviser prior to making any application.

Tip 5: Consider a Joint Mortgage

Buying a home on your own can be an extremely costly venture, especially if this is your first time. If you have a family member, partner or friend who you are willing to buy with, then it may be financially worth it for the both of you. 

A joint mortgage means that you will both be contributing to the deposit, meaning you will be able to put down a bigger deposit and get better mortgage rates. Their income alongside yours will allow you to pay off your mortgage faster and potentially buy a bigger house.

While this does seem like a good idea, it is important to seek legal advice with your mortgage partner. You will need to decide what would happen should one of you wish to sell as well as sort out percentages you each will pay towards the house. 

Tip 6: Consider a Guarantor Mortgage

Similar to the joint mortgage, a guarantor mortgage will help you buy your first home. A guarantor (a parent or close family member) would sign the mortgage with you and would state that they would cover any missed payments. 

Mortgage providers would be more inclined to lend to you if their repayment is guaranteed. 

The parent or family member would need to already own their home and be in a position of financial stability so as to ensure the missed payments would be covered.

Tip 7: Help to Buy Scheme

One of the best tips for first time buyers in the UK, is to make the most of the Government’s Help to Buy Scheme. 

With this scheme, if you have a deposit of 5% for your first house, then the government will provide a further 20% (40% in London) loan to help you get on the property ladder. 

This loan is interest free for the first 5 years, then it is charged at 1.75% after. 

Help to Buy ISAs are also available with certain banks. Depending on the amount you pay into the account, you could get a savings top up between £400 and £3000!

Buying your first home can be daunting, but here at the Mortgage Genie we can help. We can offer specialist personalised advice to help you get on the property ladder. Fill out our no-hassle form here to get a quote.

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