The Best Advice About Buying a House I Ever Heard

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If you’re feeling down about the recent change in UK government policy, then this is the article for you. It may have been a blow to some, but there are still plenty of ways to get on the property ladder.  In fact, there’s never been a better time to buy. 

The property market has risen over the last 12 months by record levels due to the demand, which may have been brought about by a great number of people who are now working from home due to the Covid restrictions, and now wish to live in a more rural area. We are still seeing a strong level of enquiries for new mortgages already this year, which would normally increase as we approach the early summer months. Now would be a very good time to start looking at the area in which you may wish to live, and the properties that are, and maybe available in the near future.

If you’re eager to own your own home and want to start building up your equity, take a look at these top tips and benefit from the best advice about buying a house:

1. Use the Help to Buy Scheme 

If you’re a first-time buyer, the Help to Buy scheme could be a savvy way to secure an interest-free loan for a period of up to five years. Introduced to help people get on the property ladder, a Help to Buy equity loan is designed for people who want to purchase their first home. If you fit the bill, you can borrow up to 20% of the purchase price of your property (or 40% if you’re in London). 

There is a maximum property price that you’ll need to take into account, but this isn’t a concern for most first-time buyers. If you want to purchase a home using the Help to Buy scheme, you’ll need to ensure that your property doesn’t exceed these limits. However, the maximum amounts do vary depending on what part of the country you’re in. Currently, the maximum price for a London property is £600,000 for example, while it’s £407,400 in the East of England and £261,900 in the East Midlands. 

The Help to Buy equity loan is interest-free for five years and, from year six onwards, you’ll pay 1.75%, subject to CPI fluctuations, plus 2%. Your interest payments will decrease if you make a part repayment of the equity loan.  This is because the amount the interest rate is applied will reduce.  Even if you need to use a traditional lender to access the remainder of the funds you need to buy a property, the chance to get an interest-free loan on 20% or 40% of the property price can significantly improve your financial situation and increase your buying power.

2. Look for Low Deposit Mortgage Options

When mortgage companies insist that applicants have a 20% or 30% deposit, it can make it difficult – or impossible – to get on the property market, change your location, or upgrade to a larger home. If you’re spending vast amounts of money to rent a home, for example, it could take years to save up a large deposit. 

Fortunately, some lenders and scheme providers are recognising the difficulties that large deposits cause and are willing to accept much lower amounts. First-time buyers only need a 5% deposit to access Help to Buy equity loan, for example. 

If you want to secure a mortgage with a low deposit, a shared ownership property can be another viable option. As you’re only purchasing part of the property (and paying rent on the rest), the deposit you’ll need is typically lower than if you try to buy a home outright. 

3. Use Property as an Investment

Although property values can rise and fall, many people consider property to be a relatively stable investment. Providing you can purchase when prices are low, and sell when the market value increases, you could make a tidy profit from buying a property. 

However, this isn’t the only way to generate revenue from a property. If you secure a buy-to-let mortgage, for example, you could rent out all or part of the property to a tenant and generate short-term income too. 

Buying to let can seem like a hassle at first, but there are plenty of benefits on offer. If you don’t want to be a hands-on landlord, you can even use a property management company to handle day-to-day issues that may arise, such as property maintenance and tenant references. 

4. Don’t Let Bad Credit Hold You Back

It’s easy to assume that a bad credit history will prevent you from getting a mortgage, but this simply isn’t the case. While you might face knock-backs from some traditional lenders, there are a variety of mortgages aimed at people in the same situation as you. In fact, many mortgage companies are expanding their range of ‘bad credit mortgages’ simply because there are so many people with a low credit rating or poor credit history that want to improve their financial situation. 

It is important that you are aware of how you may stand in today’s mortgage marketplace, and we would always recommend that you seek access to your credit file from either Experian or Equifax, who are the companies most used by lenders. By viewing your credit file yourself you can see if you have any credit issues and whether they are correct. It is not unknown for a credit file to show issues that may not relate to you, and you would then be in a position to take this up with the agency and the organisations who have registered the default.

We are very fortunate that in today’s mortgage market that we have the traditional lenders who mainly look to lend to clients with a perfect credit score, although some of these are now accepting a level of adverse, especially where it is historical. There are also some smaller lenders who have chosen to accept certain levels of adverse credit, due to an acceptable reason, and then there are  specialist lenders who are there to take on the more difficult cases that would normally be refused by the traditional lenders.

What all clients should accept is that the more historical the adverse credit is, and if it has been satisfied, the more flexible the lenders will be. The other factor that may help the lender’s decision is the size of the deposit, or in the case of Help To Buy, the loan to value that the lender is going to have. Mortgage lending is about risk, the lower risk will generally attract more attractive terms.

By getting on the property ladder and arranging an affordable mortgage, buying a property could be the first step to getting your finances back on track. With expert advice, you can find the best deals based on your unique circumstances and ensure that bad credit doesn’t prevent you from moving forward. 

5. Talk to a Mortgage Broker

Taking out a mortgage is one of the biggest financial decisions you can make, so why go it alone? By consulting a mortgage broker, you can access advice and guidance that will help you to navigate the complex world of loans and mortgages.

As mortgage brokers have an overview of the market, they’re well-placed to identify the deals and schemes that are suitable for you today.  Your credit profile may suggest that you wait a little while before you apply for a mortgage, when terms may be a little more attractive and you would more likely be accepted. By checking your eligibility, they’ll be able to provide you with detailed information about the mortgage options available to you and even help you with the application process. 

Whether you have a deposit ready, you’re struggling to save up the desired amount or you’re worried that a less-than-perfect credit history will stop you from getting a loan, an experienced mortgage broker can do the hard work for you and find you a deal that works for you. 

Contact ‘A Mortgage 4 You’ Now

With more than 40 years of experience in the financial services industry, we’ve got the inside track when it comes to mortgages and loans. From buy to let arrangements and first-time buyer schemes to bridging loans and commercial mortgages, our professional advisers can give you the lowdown on which mortgages are right for you. 

To learn more, contact our team on 0800 802 1003 and let us help you get the mortgage you deserve. 

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