While the property market is booming, it’s not an easy time for first-time buyers. Here’s what you can do to improve your chances of joining the property ladder…

Buying your first property in the current climate can be tough, as lenders are seeking higher deposits. With a buoyant property market, many are having to cope with increased demand and are therefore more prudent about the number of mortgages they offer to first-time buyers. With this in mind, here are our top tips for increasing your chances of getting a mortgage as a first-time buyer…

Keep saving for a deposit

Make sure you have saved up a substantial deposit of at least 15 per cent of the price of the property. Unfortunately, there are few lenders currently offering 90 per cent loan-to-value mortgages at present due to ‘unprecedented demand’. Many are withdrawing 90 per cent mortgage products in order to meet the demands of existing applications. At the time of writing, there are some lenders offering mortgages to buyers with a ten per cent deposit, but lenders remain cautious about doing so.

Know that more money means more options

Having a higher deposit will open you up to a wider range of mortgage options. This, in turn, will increase your chances of getting a more competitive mortgage product. David Hollingworth, Associate Director for L&C Mortgages, says that ‘the choice widens’ for those with at least a 15 per cent deposit. This is another good reason to not rush your purchase.

Take advantage of current restrictions

With the Rule of Six guidelines introduced on 14 September, it’s a tough time for anyone who enjoys socialising. It’s certainly not the most fun time to go out. Make the most of the restrictions by viewing the current situation as an opportunity to save more money. You’ll be much better off staying in more frequently and the pounds will soon start to accumulate. Research from Nottingham Building Society has revealed that nearly 25 per cent of those planning to buy their first property were able to save more due to lower costs such as not commuting and eating out less.

Keep an open mind on location

Consider looking at as many areas as possible so that you may be able to buy in a cheaper location. You could make a considerable saving on the price of a property if you are prepared to move to somewhere new. Areas that command higher prices tend to be conveniently located to mainline stations, but your work commute may have changed, and you may not need to be living near a station. Moving to a more competitively priced area may now be a possibility.

Have your paperwork ready

Ensure that you have all of your paperwork to hand when you talk to a mortgage broker or lender about your desired purchase. This means a year’s worth of bank statements and three months’ worth of salary slips, plus details of any loans or credit cards. You will need proof that you are on the electoral register. Your broker will also need to know your income and outgoings each month.

Check your monthly costs

On that note, be clear on what you are spending. You may have an idea of how much your bills are but know exactly what your average outgoings are each month. Check the last three months’ worth of bank statements and work out a monthly spending average. It’s important to be sure about this as prospective lenders will look at what you are currently spending each month.

Factor in other expenses

When moving house, there are other costs you need to think about which are easy to overlook in the excitement of buying your first property. There is the cost of a valuation, which can be around £200 to £800 depending on the location and size of the property. This is purely intended to satisfy the lender that your desired property is worth what you are intending to pay. You may wish to have a full survey, especially if the property is old or has undergone some structural work. A survey is an inspection of the property’s condition and is more expensive. The price varies but is typically around £400 to £1500 depending on the property.

Remember to factor in solicitor’s fees which can be around £900 to £1500 including VAT. Your solicitor will conduct local searches for you which can cost up to £300. A mortgage broker may also charge an admin fee, but they should be open with you about how much this is likely to be from the beginning. However, on a positive note, Stamp Duty was temporarily cut by Chancellor Rishi Sunak on 8 July on properties worth up to £500,000, generating a considerable saving for first-time buyers and anyone paying less than £500,000 for a property. This will be effective until 31 March 2021.

Try to clear any loans

With over 9 million households in the UK suffering from reduced income due to the impact of Covid-19, it’s understandable if you have outstanding loans or have had to incur a credit card balance. If you are able to pay off your loan or clear the balance on your credit card, this will stand you in good stead. If not, at least ensure that you meet your loan repayments on time every month as this demonstrates an ability to manage your finances. Try to pay off more than just the minimum balance on your credit card.

Keep in touch with your mortgage broker

Finally, if you’ve considered every scenario and you’re unable to afford to buy at the moment, keep in touch with your mortgage broker. They will be completely up to date with what’s going on in the market, including any changes in lending policies that could make it possible for you to buy. MBA’s Mortgage & Protection Adviser Shaun De Moura says: ‘We can save prospective buyers a considerable amount of time by knowing lenders’ ever-changing criteria and affordability calculations from across the market. We are informed in advance if products or criteria are changing, and this could help clients massively by saving them time and potential heartbreak if income multiples change.’

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