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What is the Best Way to Get a Mortgage for a First-time Buyer?

You may be eligible for a first-time buyer mortgage if you have never owned a house before.

If you have ever owned or inherited property, even though you’ve never lived there, you are not considered a first-time buyer.

Remember that many mortgage deals are available to first-time home buyers but also offer assistance to homeowners who already own a house.

If you’re a first-time purchaser, you will get a discount on stamp duty. However, if you buy as a couple, and one of you previously owned property the other will lose their first-time buyer status.

Commercial property owners have good news. You can still be considered first-time buyer if you own a restaurant or shop but not a home.

Are You a First-time Purchaser?

You’re a first-time buyer if:

  • You don’t currently own a home, either in the UK or abroad
  • You don’t have a previous home in the UK.
  • You have never owned commercial property such as a restaurant or shop.
  • You own or were the owner of, a property in the UK or overseas.
  • You have inherited a property that someone else has.
  • Someone is purchasing a property on your behalf, but they already have one.

According to Myles Robinson at Loan Corp, lenders will likely lend you between three and five times your annual salary. They also consider your financial situation.

Here are some of the criteria lenders and banks use to determine how much you can borrow.

  • Income
  • Deposit
  • Regular outgoings
  • Debt
  • Credit history

It’s a smart idea to spend sensibly and cut your outgoings for three to six months before applying to increase your borrowing capacity.

It is also worthwhile to find out your credit score. Before you apply for a mortgage, make sure that the information you have is accurate and current.

You can also improve your credit rating by showing lenders that you are comfortable managing debt. One common way to do so is to use a credit card and make the payments on time.

If you aren’t already a member of the electoral roll, this is a sign that lenders regard as reliability.

You May Read: How to Obtain a One-time Construction Loan?

What Deposit is Required for a Mortgage to a First-time Buyer?

The higher your deposit is, the higher your interest rate when buying a house.

To get a mortgage, you must have a minimum of 5% deposit on your property. This will lead to a 95 loan–to-value (LTV), mortgage. This is the maximum amount that most lenders will accept.

LTV refers to the amount of money you need to purchase the property. The LTV ratio measures how much you can get from mortgage lenders.

It’s worth saving more than a 5% deposit, if possible.

Ways to Get Your First Mortgage

If you are a first time home buyer and want to apply for a mortgage, here are some things you must do before starting the application process:

  1. Check how much money you have saved for buying the home for yourself. 
  2. Search for various schemes designed for the first time buyers and list down whichever suits your requirements.
  3. You must ensure that you can afford the mortgage. 
  4. Search for a property
  5. Do a thorough research and find the best type of mortgage for yourself. 
  6. You can use the tables available online for the first time buyers to choose the best mortgage for yourself. 
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