Entering the property market as a first time buyer  can be a challenging and overwhelming decision. It’s particularly challenging when you consider the current state of the housing market, where prices have reached historic highs, and there is a level of uncertainty surrounding interest rate hikes.

However, with the help of this guide, you can gain a better understanding of the mortgage process and feel more confident in your ability to navigate the market successfully. This guide will provide you with the necessary information to make informed decisions, such as choosing the right type of mortgage, understanding interest rates, and calculating affordability.

By following the guidance provided in this guide, you’ll be equipped with the tools and knowledge to approach the mortgage ladder with more confidence and make the most of your opportunities in the market.

Increase your deposit 

By increasing your deposit  when purchasing a property, you can significantly enhance your mortgage options and potentially secure more favorable interest rates. This, in turn, can improve affordability and lower your monthly mortgage payments, providing more financial flexibility and stability.

Fortunately, there are several ways to increase your deposit, and one of them is by utilising government schemes. For instance, the Lifetime ISA (LISA) is a government scheme that allows you to save up to £4,000 per year towards your first home. 

With a LISA, you’ll receive a government bonus of 25% on your savings, which means that you could receive up to £1,000 in bonus money each year. This bonus can be a significant boost to your deposit, helping you to secure a more favorable mortgage and achieve your homeownership goals more quickly.

Speak with a specialist mortgage broker 

If you’re planning to take out a mortgage, seeking the advice of a mortgage broker can be a valuable step in achieving the best interest rates and improving your chances of success with your application. 

A mortgage broker can provide you with expert guidance on the different mortgage products available in the market, help you understand the terms and conditions of each option, and ultimately find the best mortgage deal that fits your specific needs and circumstances.

In addition to helping you secure more favorable interest rates, a mortgage broker can also help you increase your budget and potentially enable you to purchase a more suitable property. They can assess your financial situation, consider your income and expenses, and provide you with a realistic assessment of what you can afford. 

By doing so, you can have a clearer picture of your financial capabilities and make more informed decisions about the type and size of property that best suits your needs.

With unpredictable interest rates and high property prices, there has never been a better time to seek professional mortgage advice. A mortgage broker can provide you with the expertise and support you need to navigate the complex and competitive mortgage market and ensure that you secure the best possible mortgage deal for your circumstances.

Guide: Questions to ask a mortgage broker  

Guide: Why use a mortgage broker  

Check your credit report

Obtaining a credit report is an essential step in the home buying process, as it provides you with a clear understanding of your financial situation and helps you make informed decisions when applying for a mortgage. 

By reviewing your credit report, you can identify any errors or inaccuracies that could be negatively impacting your credit score. You can then take steps to address these issues and improve your credit score before applying for a mortgage. 

By ensuring that you apply to lenders who are more likely to approve your application based on your credit score, you can avoid the negative impact of multiple credit checks.

Even if you have adverse credit  there are still lenders who may consider your application. However, it’s essential to be realistic about your options and seek advice from a mortgage broker or financial advisor who can help you navigate the process and identify the most suitable lenders for your individual circumstances.

Explore affordable housing schemes 

If you’re a first-time buyer looking to improve your position in the property market, it’s worth exploring affordable housing schemes such as shared ownership and the first homes scheme. 

These schemes can help you to get on the property ladder with as little as a 5% deposit, making homeownership more accessible and affordable.

Shared ownership 

Shared ownership is a scheme where you purchase a share of a property, usually between 25% to 75%, and pay rent on the remaining share. This can help to lower your initial deposit and mortgage repayments, making homeownership more affordable. Additionally, as you build up equity in the property, you can gradually purchase additional shares until you own the property outright.

Shared Ownership Mortgages  

The first homes scheme 

The first homes scheme is a new government initiative aimed at providing affordable homes for local first-time buyers. 

The scheme offers new build homes at a discount of at least 30% of the market value, making homeownership more accessible for those struggling to get on the property ladder. To be eligible, you must be a first-time buyer and meet other criteria, such as earning below a certain income threshold and having a strong local connection to the area.

First Homes Scheme   

Secure an agreement in principle 

Obtaining an agreement in principle  is a crucial step in the home buying process, particularly for first-time buyers.

 An Agreement in principle also known as a decision in principle, is a conditional approval from a lender that indicates how much they are willing to lend you based on your financial situation and credit history.

There are several benefits of obtaining an agreement in principle as a first-time buyer. 

Firstly, it provides you with peace of mind that you are likely to secure a mortgage, giving you a clear understanding of your budget and helping you to narrow down your property search. 

Secondly, it can help to strengthen your negotiating position with sellers and estate agents, as it demonstrates that you are a serious buyer with the financial means to proceed with the purchase.

Agreements in principle are usually valid for three months and can easily be extended if necessary. It’s worth noting that obtaining an agreement in principle does not tie you to a specific lender or product. Instead, it gives you the flexibility to shop around and compare mortgage offers from different lenders before making a final decision.