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Less Coffee, more Property...

How to save for and buy your first property in 2018…

If you’re dreaming of buying your first property the entire thought, let alone the process, can be incredibly confusing and daunting. The “Buying Process” typically consists of:

1. Having sufficient funds for a deposit, legal fees and moving
2. Applying for a Mortgage
3. Searching for your property
4. Making an offer
5. “Additional fees” including solicitors, necessary surveys and the final move.
6. Reaching completion and getting your keys.

For most potential first time buyers getting through steps 1 and 2 is a mission in itself, if that’s you then this article is definitely worth a read!


Less coffee, more Property!

Donovan O’Connor- Operations Manager

Don 2

The first time buyers market has a tendency to be somewhat overshadowed by fear. A lot of people simply assume that they are not in a position to buy rather than calculating their eligibility, which isn’t surprising when all we seem to see in most Property News headlines is how difficult it is to get on the property ladder for first time buyers, especially in London.

There are a number of factors currently in place including Stamp Duty cuts, 5% Deposit Schemes and Shared Ownership which are designed to welcome more first time buyers into the market, which could mean you’re ready to get on the property ladder. So here’s my advice on how to get there:

See a Mortgage Advisor or visit your Bank

My ultimate advice is that, first and foremost, you see a qualified Mortgage Advisor* or your Bank who can help you determine if you are in a position to buy and, if not, will help you identify what it is that you need in order to get to that stage. Most (but not all!) initial Mortgage Advice consultations are free of charge and consist of that very important “calculation” to ascertain your financial position and eligibility.

(*Note, you do not need a Mortgage Advisor to purchase your property but it is something I would personally recommend, especially if you are a first time buyer unfamiliar with how the process works.)

If you’re not yet eligible consider your options!

If, following your mortgage consultation, you are not in a position to buy you should have a pretty clear idea as to what the disqualifying factors are, which are most likely to be one of the following:

• Not enough money for a deposit:

Regardless of your household income, a deposit could mean the difference between buying and not buying your first property. First Time Buyer Mortgage deals start at 5% so the deposit amount is calculated based on the property price. Don’t have enough for a deposit? Try these useful tips to help you save quicker:

a. Firstly, calculate your potential savings
It sounds obvious but by identifying where you spend your money weekly/monthly will show you where you can cut back. Did you know that by eliminating your daily £2.50 cup of coffee on your way to work could save you around £600 a year! Review your spending and cut down where possible. Calculate how much you could save in a year which will give you a potential timeframe for reaching your “deposit” goal.

b. Decide where you would like to save
Once you determine how much you could and want to save, consider where you’ll be saving. Open a savings or ISA account and pay in regular instalments. A number of banks and building societies offer Help to Buy ISA’s so do your research.

c. Downsize or flat-share to save on rent
This one also sounds obvious... If you don’t have the option to move back home, consider how much you spend on rent at the moment and whether there are any better options available to you. For example, if you work and live in the City (London zones 1-2), it’s likely that your rent is a lot higher than if you were to move further away (London zones 3-9). Of course transport costs come into effect, but whether you’re renting or flat-sharing, there may be potential to save. Maybe we can help? Give us a call to find out on 0207 055 8000.

• Bad credit score
This point is often overlooked. A healthy credit rating is a necessity when applying for a mortgage so make sure you plan ahead to improve yours if it isn’t up to scratch. There are a number of online tools which you can use to check your credit score free of charge.

• Not enough for Legal and other Fees
Some first time buyers are unaware that when buying a property there are other costs which arise during the “transaction” process such as legal fees, stamp duty (although this has been scrapped for properties up to £300,000 around the UK and £500,000 in London) and necessary surveys. I would therefore advise that you save a decent amount so that you’re not caught by surprise. How much this will be depends on your mortgage conditions i.e. will you require a survey, property age and service providers such as solicitors rates. To give you an idea, typical additional costs when buying a property valued at £225,000 are roughly £3,000.

With the right savings plan, a good credit rating and a little bit of financial discipline you’ll be able to get yourself to the “Mortgage Application” stage of the buying process. When you do and you set off to apply for a mortgage pick up a £2.50 cup of coffee on the way, because you deserve it!

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