First Time Buyers Helpful Tips

Activity Among First-time Buyers Is Increasing As Annual Price Increase Slows. Here are some tips for first time buyer.

When it comes to purchasing properties, first-time buyers are often sensitive to property prices and the mortgage rate prevalent in the market. Property prices in the UK increase every year, adding to the value of houses and flats being sold. First-time buyers need to be conscious of this increase as it influences their overall cost of purchasing their first homes.

In March 2023, the average price of properties entering the market experienced a rise of 0.8%, which is below the monthly rise of 1% witnessed in March over the last two decades. This reflects greater pricing caution by property sellers across the country. While the 1.2% price jump in the top-of-the-ladder sector acts as an exception, properties for first-time buyers the ones in second-stepper sectors are seeing a slower annual price rise.

As of March 2023, the new asking prices of properties reduced by £5,800 from the peak of October 2022. Since then, the annual price rise is steadily decreasing, coming down to 3% in March. This has made financial experts feel that the market is getting increasingly stable for first-time buyers to get on the property ladder.

Bringing back the glory of 2019

In terms of the UK’s property market, 2019 is considered to be one of the most fruitful years. Since then, the market has not been able to meet the conditions prevalent in 2019. In the month of March, the sale of typical first-time buyer properties, i.e., properties with two bedrooms or less, has increased substantially. To be precise, the figures are just 4% behind those recorded at the same time in 2019.

This increase in first-time buyer activity shows that the asking price for first-time buyer properties is not more than £500 lower than last year’s peak. This implies that the first-time buyers are either receiving good support from their family members or have been saving up well for their deposits. Whatever the case is, the slowing down of the price rise in 2023 is allowing more and more first-time buyers to purchase their dream homes.

How to prepare yourself as a first-time buyer to grab the opportunity?

In an environment that is conducive for first-time buyers, it is advisable to make the most of the opportunities available to you. Even if the financial conditions are in your favour, purchasing a house is not as simple as it seems. It involves a lot of dynamic factors you should be considering before taking a deep dive into the property market.

Here are a few ways in which you can prepare yourself to buy a property as a first-time buyer:

Look for the right mortgage broker

If you are planning to purchase your first house on a mortgage, look for the right mortgage broker in your town. A mortgage broker will help you find the best first-time buyer mortgage deal and connect you with the right mortgage lenders.

Depending on your financial circumstances, preferences, and affordability, a mortgage broker will scan the entire market and bring you the most suitable deals. Even if you suffer from hiccups like bad credit, a broker will hook you up with specialised lenders ready to offer financial aid to you.

Get a Agreement in Principle (AIP)

It is never a good idea to take any chances when it comes to purchasing your first property. Once you have chosen the property you want to purchase, approach your mortgage lender and get yourself a Mortgage in Principle (MIP) or Agreement in Principal (AIP). MIP is a document stating that your lender is ready to provide you with a specific sum of money as a mortgage, provided the information provided by you is correct.

While a Mortgage in Principle is an estimate and not legal tender, it helps you lock a deal with the concerned property seller/dealer. If a seller receives multiple requests to purchase their property, they would give preference to a buyer with a MIP. The document lets a property seller know that you are serious about purchasing the property. A homebuyer also consults their mortgage or remortgage broker before asking for a MIP from their lender.

Look for first-time buyer benefits

Now that the financial conditions are suitable for first-time buyers to get on the property ladder, it is the right time for them to know the benefits the Government has in store for them. The Government has devised a number of schemes to help first-time buyers purchase their first homes. From First Homes Scheme and Lifetime Savings Account (LSA) to shared ownership and help-to-buy initiatives, you can make the process of buying your dream home much easier by choosing the right first-time buyer scheme.

Most of these schemes reduce the overall costs incurred in getting a mortgage or purchasing a property. Such financial aid is always welcomed by first-time buyers as most of them already struggle to manage their finances.

Save more for a better LTV

Loan-to-value (LTV) plays an important role as you get a mortgage against the property you purchase. If you do not want to spend a large chunk of your income in making monthly repayments, it is advisable to make a bigger deposit. As first-time buyers are eligible for a range of different benefits, they can set aside a relatively larger sum of money as a deposit by saving more.

When you make a bigger down payment for your property, you pay interest on a smaller mortgage, thereby improving your LTV. A better LTV puts you in a better financial position, freeing you from the burden of making bigger repayments for your first property.

Look for fee-free mortgage services.

As you look for the right mortgage broker to purchase your first property in a financially conducive environment, see if they offer fee-free services. Fee-free mortgage brokers choose not to charge for services. This further reduces the financial burden on your shoulders as a first-time buyer, giving you an incentive to make a bigger deposit.

If you are careful and precise while choosing your mortgage broker, you can make the process of purchasing your first home a memorable one!