It’s a fact that buying your first home is harder than it’s ever been. Regardless of how many store-purchased lunches you forgo or any home spun parental advice.
Luckily for most of us, last November, the Government finally cut millennials some slack with a much-anticipated change to stamp duty rules.
These changes could potentially save the average buyer thousands on the cost of their first home.
However, there are several other hurdles to overcome – like getting a mortgage agreed.
“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.
So if you’re a first time buyer, make your dream a reality and get on the property ladder in 2018.
#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. The average moving cost is a massive £7,590. Forget this cost at your peril.
Setting a savings target early is important to keep you focused and on track. Remember to track both deposit and moving costs as part of your saving goal.
#2 Understand your spending
One of the first steps to feeling more in control of your finances is to monitor your spending. Remember to plan in advance and review spending against this.
You’ll quickly get a clear view of where you are spending your money. As well as the places you can start making cutbacks, in order 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 your (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. Also 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. Don’t just talk with your bank, instead also talk to local mortgage brokers as they will be able to introduce you to a wider range of products and can explain your different options in an unbiased way.
#6 Talk with loved ones
Mums and Dads are playing an increasingly important role helping many first-time buyers get on the property ladder. With their help extending pass gifts or loans to help with the deposit.
There are even mortgage products which lets a parent or family member’s income to be taken into account. This increases your borrowing power and could offer you a lower overall rate.
If your parents would like to support you, there are options available that do not involve handing over money.
#7 Research affordability hotspots
There’s many ways to find hidden gems, including looking just outside your preferred area or ask agents for pre-market properties.
Also if you can find an area where there’s likely to be an infrastructure improvement or redevelopment, then you might be able to purchase a property at a reasonable price before they rocket.
Another tip is to look for areas where crime is reducing, but prices haven’t began to rise. This means you can purchase a property for a fair price and sit pretty as prices rise as the crowd rushes in to buy.
It’s best to avoid areas where the prices have sky rocketed within the last two years as you’re unlikely to find a great deal or make money on your house when you come to sell.
#8 Know the local Rate of Sale
On average, it takes 96 days for a property to sell in the UK. However, the market moves quicker in a sought-after area.
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 to get on the property ladder
In a recent Post Office Money survey of 1500 recently successful first-time buyers, their number 1 piece of advice 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. Remember you can always move up the property ladder late on and into your dream location.
#10 Be ready… in principle
Having an agreement in principle will help ensure you are taken seriously when you begin your property search. However, 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. Plus it remains valid for 60-90 days which could be plenty of time for you to find your first home.