As we approach the New Year, the Chancellor’s recent move to abolish stamp duty for first-time buyers has likely motivated many aspiring home owners to begin exploring how they can make their dream of owning a home a reality.
“Planning to buy a home can be as daunting as it is exciting for first-time buyers but there are a number of simple steps people can take to prepare themselves and make the process as easy as possible”, says Owen Woodley, Managing Director of Post Office Money.
1. Set a savings goal
Saving for a deposit is undoubtedly one of the biggest hurdles many will face, however 65% of prospective buyers also underestimate the cost of moving which many may be surprised to hear is an average of £7,590. Therefore, setting a savings target early is important to keep you focused and on track.
2. Understand your spending
One of the first steps to feeling more in control of your finances is to monitor your spending – plan in advance and review spending against this. You’ll quickly get a clear view of where you are spending your money and where you can start making cutbacks to help you save.
3. Calculate how much you can afford to borrow
Once your savings pot is up and running, consider using an affordability calculator to get an idea of how much you’ll be able to borrow based on your income and outgoings. Although this is a guide, this information will help you focus your research on properties that are within your price range.
4. Know the (credit) score
Before getting a mortgage, you will be credit checked so now is the time to check your own credit report and ensure all the information it contains is accurate and up to date. A good credit score can be the deciding factor in not only getting approved for a mortgage but also the rate you are offered. Plan now to start paying down any outstanding debt, be sure not to miss any agreed payments on utility bills or mobile phone bills and try to make more than the minimum repayment in the 6 months prior to your mortgage application.
5. Find the right mortgage for you
Take some time to really investigate the variety of mortgages that are available for first-time buyers. Some mortgage providers such as Post Office Money, have been developing innovative mortgages to help address some of the biggest challenges facing first time buyers in the current market.
6. Time to talk
Mums and Dads are playing an increasingly important role helping many first-time buyers get on the property ladder and not only through financial gifts or loans to help with the deposit. For example, some mortgages lets a parent or family member’s income to be taken into account to increase your borrowing power. If your parents would like to support you, there are options available that do not involve handing over money.
7. Research affordability hotspots
If you’re hoping to find a hidden gem in a potential property hotspot of tomorrow, it helps to do your research first. The Post Office and Proportunity have developed a simple step-by-step guide.
8. Know the local Rate of Sale
On average, it takes 96 days for a property to sell in the UK, but it can be as few as 61 days in Bristol. Understanding the rate at which property sells in the area you hope to buy in will help you plan ahead to move quickly if necessary and prepare for any unexpected costs if a sale takes longer than planned.
9. Broaden your horizons
In a recent Post Office Money survey of 1500 recently successful first-time buyers, the number 1 piece of advice they wanted to pass on was to be flexible when it comes to your dream location. In fact, 70% chose to buy a home an average of 26 minutes from their original ‘preferred’ location.
10. Ready… in principle
While an agreement in principle will help ensure you are taken seriously when you begin your property search, be cautious of applying for too many as each credit search will leave a mark on your credit report. While not a guarantee it will give you a better idea of how much you will be able to borrow from that lender and it remains valid for 60-90 days.
Are you ready to get on the property ladder this year?
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Jennifer is the Deputy Editor (Digital) for Homes & Gardens online. Prior to her current position, she completed various short courses a KLC Design School, and wrote across sister brands Ideal Home, LivingEtc, 25 Beautiful Homes, Country Homes & Interiors, and Style at Home.
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