How to crack the code as a first-time buyer in Brighton

With house prices rising, taking your first step onto the property ladder my look harder and harder with every month that goes by. We asked our teams for their top tips and answer the most frequently-asked questions to help you overcome this hurdle:

Set A Tight Budget - And Stick To It!​

The cost of living has been one of the property industry’s biggest talking points across the country in Q2. Rising inflation, fuel and house prices are making it harder for households to save money, but the fundamentals still apply.

Opening saving accounts and Help-To-Buy ISAs is the first thing you should do when trying to save for a deposit. Splitting your money across different account makes it much harder to accidently over-spend. Though it sounds unappealing, being strict with how you spend money is very important.

Fancy a takeaway? Put some food in the oven. Been invited to go out with friends? Get them round to yours for a couple of drinks. Saving doesn’t have to take years – especially if you’re looking to buy with another person. The smallest deposit available for first-time buyers is only 5% (so £10,000 if the place you’re looking at costs £200,000). If you both save well, you could move in before you know it.

Saving more than the minimum deposit will give you a head start also mean saving on other costs such as solicitor fees, stamp duty tax, mortgages and more, and you’ll have a lower interest rate.

What A Mortgage Is And How To Get One​

Applying for your mortgage can like a convoluted process with a lot of paperwork, but getting your head around it early on it makes it all much more straightforward.

It is compulsory to provide evidence of income, credit commitments past spending and, if you’re self-employed, you need to provide your tax returns and business accounts for the last 2-3 years.

After this, lenders will conduct an affordability assessment to examine your finances and credit history, to decide if you can afford the long-term repayments or not. It is imperative to check if you have a good credit score before applying for a mortgage because any red flags can lead to applications being declined, which in turn harms your chances of being accepted in the future.

What Is A Loan-To-Value?​

If you’ve ever spoken about mortgages, you’ll probably have heard the phrase ‘Loan to Value’, or LTV. This isn’t the money put towards a deposit, but the amount you’ve loaned to buy a property compared to the full price of said property.

So, if you spend a deposit of £20,000 for a house that is priced at £200,000 and therefore have a mortgage of £180,000, your LTV is 90%.

Also, the lower your LTV is, the lower your interest rate is likely to be – this is because all lenders view smaller loans as smaller risks. Rates are usually lowest when you pay a deposit of 40%, which leaves 60% LTV.

What Is The Difference Between Freehold And Leasehold?​

The difference between ‘freehold’ and ‘leasehold’ is simple. Buying a property freehold means you will own the property and its land. You’ll likely be buying freehold when buying a house.

If buying an apartment or flat, you’ll be buying leasehold. This is when you buy the lease for a property from the freeholder and therefore have the right to live in said property for an agreed amount of time – normally a number of years. You won't own the property outright, the freeholder (or landlord) will retain ownership of the property and its grounds.

Are There Any Schemes To Help First-Time Buyers?​

Yes - there are lots of schemes to help first-time buyers get on the property ladder. One of the best is the ‘Help to Buy’ scheme. This applies to people buying a ‘new build’ and includes an equity loan, where the government lends first-time buyers and existing homeowners money to help them to buy the home(s).

To fall within the scheme, the property in question must cost £600,000 or less. If you meet the criteria, you will be able to borrow up to one fifth of the property’s worth for the first five years following your purchase. If the property is located in London, you can borrow 40%.

 

If you have any unanswered questions about how to make it onto the property ladder, call your local branch via our homepage and our property experts will be happy to answer any queries you have.