If you’ve set your sights on buying the house of your dreams in 2019, you’ll be pleased to hear that current buyers’ market conditions look set to continue for at least another six months. That doesn’t mean you should just sit back and wait for the perfect opportunity to come to you though.
1. Plan for a deposit, even if you don’t have to
According to Rawson Finance, lenders are granting 100% loans in certain circumstances, but smart buyers are putting down deposits anyway. Putting down a deposit is traditionally around 10% of the purchase price, this helps to minimise the risk your bank is taking by granting you a loan. This can have a significant effect not only on their likelihood of granting you finance, but also on the interest rate they’re willing to offer you. Buyers with deposits have been known to qualify for interest rates as much as 2.5% lower than those asking for 100% bonds. That can literally save you hundreds of pounds over the course of a 20 year loan, and turn your investment into a real winner. Once your savings pot is up and running, consider using an online affordability calculator to get an idea of how much you’ll be able to borrow based on your income and outgoings. Although this should be used as a guide, the information will help you focus on properties that are within your range.
2. Don’t forget about the prequalification’s
Before getting a mortgage, you will be credit checked, so now is the time to check your own credit report and ensure all information it contains is accurate and up-to-date. A good credit score can be the deciding factor in not only getting approved for the mortgage, but also the rate you are offered. Plan now to start paying down any outstanding debts, 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 six months before you mortgage application. Competition for specific properties can be fierce at any time, particularly within the popular neighbourhoods and price bands. A good property, for a fair price, will often attract numerous competing offers, regardless of what the broader market is doing. The last thing you want is to find that perfect home and then lose out to another buyer simply because they took the time to get prequalified, and you didn’t.
3. Research affordability hot spots
You may have your heart set on a popular area, but so will many other buyers. On average, new buyers will end up moving 5.2 miles away from where they originally intended. Consider widening the net to make your budget go further, so you can but more space for your money. You could try searching in up and coming areas, which may become future property hotspots, rather than places where property prices have already increased a lot.
4. Play the stamp duty game
Those taking their first steps onto the property ladder have saved £2,300 on average, while those buying in London have seen almost double the discount with a typical saving £4,300. If first time buyers in England keep the costs of property below £300,000, there is no Stamp duty payable. And those buying a starter pad worth between £300,000 and £500,000 get a reduced bill, paying 5% on the remainder above the tax-free amount.
5. Help to Buy
Another popular method for first time buyers getting on the property ladder, is the Governments Help to Buy loan scheme, which will run until 2023. It’s available to homeowners looking to move as well as first time buyers, but only for new build homes. It gives an equity loan that can be used towards buying a property and means new buyers in England may need only 5% per cent deposit to get a good mortgage. With Help to Buy, even if you only have 5% per cent saved, you can get a well-priced mortgage because the Government is effectively guaranteeing the rest of the deposit. There are some limits on the price of the property you can buy and the loan must be used to buy your own home only, not by-to-let. Furthering this you have to get a repayment mortgage not an interest only mortgage.