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Buying your first home can be a daunting prospect from a financial point of view, as well as navigating the buying process.

Knowing what to expect from the home-buying process and having adequate finances in place will help you take the first step onto the property ladder with confidence.

Tips for getting on the property ladder with a first-time mortgage

A property can be an investment and to feel secure in your investment, it is important to make sure you have the financial capability to put down a decent deposit, meet mortgage repayments and pay household bills.

Before committing to becoming a first time buyer, carry out a thorough financial health check looking at your income and outgoings. Is there anywhere you can cut back? Do you have debts that may affect your credit rating?

This process is likely to be repeated by your mortgage adviser or mortgage lender so knowing where you stand beforehand is always good.

To stand a better chance of securing the home of your dreams, it is a good idea to have a chat with a mortgage adviser who will be able to explain the mortgage process and the mortgage options available.  Your mortgage adviser will also be able to conduct an affordability check to check the amount of mortgage loan you will be able to obtain based on your personal circumstances.

Once you have found the property you wish to purchase, your mortgage adviser will be able to obtain a mortgage decision in principle.  This is proof that a mortgage lender has agreed, in principle, to offer you a set amount of money and shows estate agents your offer is serious.

Your mortgage adviser will be able to advise on the most suitable lender and mortgage product for you, such as a fixed-term mortgage or a tracker mortgage.

One factor that will affect what you can buy is the Loan to Value rate (LTV). This is what percentage of the value of the property is being lent to you. A lower Loan to Value rate will help you to secure a lower interest rate as the risk to lender is lower. Note that the value of a property is determined by the mortgage company’s valuer and not necessarily by an estate agent or the price being paid to purchase a property.

Mortgage lenders usually expect a deposit of 10 per cent for a first time buyer’s mortgage, although some lenders will consider a smaller deposit – if you can afford to save more this will help to reduce the Loan to Value rate of your home.

Buying your first home – what to expect

Along with making sure you are financially prepared to take out a mortgage, the other major consideration is choosing where you want to live.

This is important to your standard of living but also to protecting the value of your home. Areas that are well connected with good schools and amenities are likely to enjoy steady house prices.

Putting in an offer to get the best price without risking missing out is an art form in itself. As a general rule, offers tend to be made slightly lower than the asking price. It is important to avoid paying more than you can afford.

When planning a budget to buy your first home, it is vital you factor in fees. As well as finding a deposit and budgeting for mortgage repayments you will need to cover:

  • Mortgage arrangement fees, although these can often be added to the mortgage loan
  • A basic valuation fee – required by the lender to determine the value of your property
  • Home buyers report– this is not required but is recommended on older properties to ensure you are fully aware of the condition of the property
  • Stamp duty – first time buyers are exempt from stamp duty on the first £300,000 on properties valued up to £500,000.
  • Land registry fees
  • Legal conveyancing fees

These can add up to several thousand pounds and it is always worth remembering that if a sale falls through you will incur extra costs due to the work already completed.

Your mortgage adviser will be able to give you an estimate of these costs.

How professional support can help

Seeking the help of a mortgage advisor will help you to make sure you get the right mortgage deal to make the most of your money.

While taking your first steps onto the property ladder can be daunting, seeking the help of a professional is a good way to get off on the right foot.

For help with a first time buyer’s mortgage contact AMG Financial Solutions -Staffordshire on 01785 225983 or email stafford@amgfs.co.uk.

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