First Time Buyer Questions
· Who qualifies as a first time buyer?
If you have not bought a property before in the UK, or indeed the world then you will be regarded as a first time buyer for stamp duty purposes. Some lenders are more generous and if you haven’t owned a property for a number of years then some will offer you a first time buyer product
· How much deposit does a first time buyer need?
You need a minimum of 5% of the purchase price. This can be from your own savings or a gift from family. If you are receiving a contribution for your deposit from a builder then you would usually need to top this up with 5% of your own deposit.
· How do I get my Help to Buy ISA cash out for my deposit?
Your solicitor will handle this and make sure the funds are withdrawn at the right time, including your bonus if applicable
· How much can I borrow as a first time buyer?
The maximum amount you are able to borrow from a lender is based upon your annual salaried wage. Most commonly lenders will let you around 4.5 time your salary, however in some circumstances lenders will increase this, for example if you have a high income, a large deposit or have certain occupations. Try our affordability calculator to get a real result direct from the lenders servers HERE
· What is an Agreement in Principle (AIP)
An AIP is proof from the lender that they would be willing to grant you a mortgage (in principle) it is a very good idea to secure this prior to viewing properties so that when you see one you like you know that it is within budget and available. Estate Agents will ask to see your AIP when you make an offer and some ask for it when arranging viewings. In reality it is proof that you pass the lenders credit score that and you pass their affordability checks. Full underwriting is done once you submit a full application.
· Do first time buyers pay stamp duty?
First time buyers do not pay stamp duty on purchases up to £425,000 and if you are buying your first home for up to £625,000 then there is a further relief available, however if it is a joint application you would both need to be first time buyers to qualify for the relief.
· What are the other benefits of being a first time buyer?
Some lenders will offer you a free mortgage valuation as a first time buyers, some will charge no lender arrangement fee and some others might even offer you a bit of cashback to help you with your buying costs.
· What costs do I need to budget for?
If you are buying an older property then it is recommended that you get a more detailed survey on the property to discover its true condition, the cost will vary on the value of the home, however this can be £700 or so for a typical first time buyer home. For a more basic report the cost of a mortgage valuation is typically around £300 however in many cases lenders will offer you a free valuation. Solicitor fees vary, however if you were to budget around £1600 for your solicitors for a typical property then this would suit most first time buyer properties, understanding they will need some cash up front to cover the cost of their searches which will be approximately £400 of the £1600 depending on the local authority area. Lenders arrangement fees are around £995 and usually added to the loan, however there are deals with no arrangement fee. A good mortgage broker will charge approximately £499.
· What kind of surveys are there?
There are 3 levels of survey. 1 – the basic mortgage valuation; this is the lender making their own assessment that the property is suitable security for them to be able to lend. These are often quick visits to the property and you do not always get to see the report. Some lenders operate digital valuations, drive by valuations or desktop valuations without ever attending the house. 2 – The Homebuyers Report; this is the level 2 survey where the surveyor offers a much more detailed report on the house and offers some guarantees following their visit. This is still a visual survey though and if you want the best possible survey then you can get a 3 – Building Survey/Full Structural; this is the top level survey that you can get and is recommended when you want to full detail.
· How long does it take to buy a property?
The typical transaction takes around 13-16 weeks, although if you are buying an empty property with no chain as a first time buyer then this can be sped up. Chains can really slow the process down though.
· What are Chains?
This is where multiple purchases are linked together, you might be buying from someone who is buying from someone else, who is buying something else (it can go on) The longer the chain the more links there are and the slower the process.
These are just a few to mention, to discuss in more detail get in touch here
