First-Time Buyer Mortgages
Buying your first property is an exciting time in your life, but it may also feel a little daunting. If you require a mortgage, this is likely to be one of the largest commitments you ever take on, plus you may have questions about the house buying process, the costs involved and ultimately what your mortgage may look like.
On this page is a useful snapshot of information that may help but, for the peace of mind you need when purchasing your first home, please enquire today about how Creative Lending Solutions can make this a reality for you. We offer valuable mortgage advice to first-time buyers and we’ll guide you through every step of the way.
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How much deposit will I need?
You will typically need to provide a minimum of 5% of the purchase price as a deposit, although a lower rate of interest may be achieved if you can manage more than this. This is because lenders use a loan to value tiering system with their rates, where improved products are available at the lower tiers. A higher deposit also means you will be taking on less of a mortgage and therefore your monthly cost will naturally be lower.
Some variations to the required deposit come in the form of Shared Ownership purchases, where the deposit size is assessed as a percentage of the share purchased; Right to Buy purchases where the discount provided by the council may be used as your deposit; and purchases from a family member where a property is sold at a price which is below market value.
More recently, it has become possible to purchase a first property with no deposit, providing that you can demonstrate a track record of paying rent.
Your deposit may be from your own savings or investments, or you may be receiving a gift from your family. A family gift is acceptable to a lender, providing that the donor is not wishing to take any ownership of the property as part of the transaction and where no repayment of the funds will be required in the future.
For added flexibility, there are some lenders who will permit the deposit to be gifted by a friend, with the same conditions as a family gift being required.
How much can I borrow?
This is one of the first questions you may have as a first-time buyer and whilst it is not possible to provide a straightforward answer here, it is something that can be confirmed following a brief fact finding exercise.
Each lender works to their own affordability assessment and calculations may be performed once income and expenditure is known. However, it must be said that for a first-time buyer mortgage there are certainly some more favourable lenders who do not cap their lending multiple for this type of customer. There are also other favourable lenders who apply a less restricted income multiple for lower sized deposits than some.
At Creative Lending Solutions we are experienced in locating the right lender for first-time buyers, whether this is simply for the right fit of mortgage product or indeed if it is for the loan amount required to complete the purchase.
What costs will I have as a First-Time Buyer?
Mortgage Product Fee
For the mortgage you require, the lender may charge a fee and this may be added to the loan amount should you wish. Any fees added to the mortgage will accrue interest over the term of the loan so you should consider this carefully.
Valuation Fee
Many lenders will carry out a free inspection of the property. This will only be a basic valuation and sometimes it will be carried out remotely. If the lender does charge a valuation fee this is usually set to a scale according to the price of the property.
Legal Fees
When you purchase a property you will need a solicitor to complete the conveyancing work, which will include completing local authority searches and registering your ownership of the property at Land Registry. Your solicitor will need to be listed on the mortgage lender’s panel of approved conveyancers.
Stamp Duty
Following the mini-budget in September 2022, first-time buyers in England and Wales will not pay any stamp duty on a property priced at £425,000 or less. This is an improvement on the previous £300,000 threshold. For a property priced at £500,000 the stamp duty will be £3,750 and for a property priced at £600,000 it will be £8,750.
How long will the process take?
Obtaining a first-time buyer mortgage should take between 2-4 weeks once an application has been submitted to the lender.
How long it is before you purchase the property and the mortgage starts, however, is largely dependent on the time taken for the legal work to be completed and for all of parties in the purchase chain to be ready to move. In general, a lender will provide an offer of mortgage which is valid for 3 months from issue, and for many lenders this is up to 6 months.
Should the process take longer than the period of the mortgage offer period, an extension of offer can usually be obtained to see things through to a completion date.
What First-Time Buyer help do we offer?
At Creative Lending Solutions we will take time to understand how best we can help you and we look forward to assisting you at every stage of the home buying process.
We will be on hand from the very beginning to answer any questions you have about the buying process and to help explain how a mortgage works, should this be required. If you require an Agreement in Principle to secure an offer on a new property, then we can typically achieve this for you on the same day you request it, providing you with a pre-approval certificate that you can show to the estate agent.
Not only can we help you find the most suitable mortgage rate as a first-time buyer but we can also source the most appropriate lender for the borrowing you require. We will complete the lender’s application form and forward them your supporting documentation. We will respond to the lender’s underwriter with answers to any questions they may have and to offer assurances where they may be required. Once your mortgage offer has been issued, we will remain on hand for any questions you may have and for any action that your solicitor may require from the lender.
More great reasons to get in touch
- Friendly, professional & convenient
- Over 20 years’ industry experience
- We value our customers
- Same day pre-approvals
- Full support provided
- Jargon-free
- Fast communication
- Available weekdays until 7pm
Your home may be repossessed if you do not keep up repayments on your mortgage.
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