Common first time buyer mistakes

The property market can be notoriously difficult to navigate and there are a variety of mistakes that every home buyer could make at various points of the property purchasing process. Hindsight is always a wonderful thing but here at the Mortgage Hut we believe that with the correct advice, it is possible to avoid making some of the same mistakes that previous first time buyers in a similar position to you have made in the past.

We want all the moments of tension and uncertainty to melt away as soon as you secure your new mortgage and move into your ideal first home, which is why we have put together a list of some of the most common first time buyer mistakes and will run you through some of the things that you can do to avoid ending up in a potentially challenging situation.

Don’t risk becoming homeless!

If you are moving from rented accommodation, don’t risk becoming homeless! Although your solicitor might indicate that your exchange date is imminent, it is always worth delaying giving notice to your landlord or letting agency on your rental accommodation until this process has been completed.

There is always the possibility that your exchange will be delayed so although holding on to your rental might mean that you will be paying both your mortgage and rent for a month or so, you can be sure that you won’t have to unexpectedly put your belongings into storage and sofa surf or temporarily move in with your parents until you can move into your new property.

This will only place additional strain on what is already a stressful experience, so give yourself some breathing room and always factor in the possibility of delays.

Beware of chains

The deal is ultimately never done until whoever is at the top of the chain really gets the ball rolling. You might find that, as a first-time buyer, you are the fourth or fifth party in a chain. If you are at the bottom of a chain, there really isn’t much you can do except wait it out. You will get there in the end and it will be worth it, it just might take a bit of patience.

Don’t neglect buildings insurance

Although you might assume that you will only need to secure insurance on your new property when you move in, you will immediately be responsible for the buildings insurance as soon as you exchange.

Buildings insurance will cover the cost of repairing or rebuilding your property if it is damaged by an event that you are covered for, which can include a flood, storm and/or fire. It will also cover permanent fittings and fixtures such as your bathroom and kitchen. Some policies will also cover outside structures that are connected to your property, including garages, fences and pipework.

Don’t risk being hit with a potentially costly repair bill by failing to organise the appropriate level of coverage for your property before you have even had the opportunity to spend your first night in your new home.

Avoid applying for credit and making purchases on credit

Until your house purchase has been finalised, it would be a mistake to apply for credit or make any significant purchases on credit. Remember, lenders will look closely at your credit score and your current debt-to-income ratio when they are making their lending decisions. A small reduction in your credit score and/or a small amount of extra debt could be the difference between being approved for a mortgage and being declined.

It is also possible for a lender to rescind their mortgage offer so until you have the keys to your new property firmly in your hands, don’t open any new credit accounts. This doesn’t mean that you can’t indulge in a spot of window shopping for your new furniture, just delay the actual purchases for a short while.

Don’t shop for a house before a mortgage

If you don’t know exactly how much you can realistically afford to pay, you might well end up wasting precious time viewing properties that are just out of reach. Equally, you might also find yourself despondently looking at properties that you think are somewhat disappointing only to realise that your budget stretches much further than you initially expected.

As a first-time buyer, it is likely that your priority is to purchase your ideal first property and secure a loan with a monthly payment that you can comfortably meet each month. After all, you want to be able to enjoy your property and not have to spend sleepless nights worrying about how you’re going to afford to pay for your home.

Entering a few basic details into the Mortgage Hut affordability calculator should give you a good indication as to how much you could afford to borrow but it is always a good idea to also approach an experienced broker who will be able to use their knowledge of the marketplace to help you to secure the best deal.

Shopping for a mortgage is similar to shopping for any other expensive product in so far as it will always pay to compare a range of offers. Fees, interest rates, discount points and closing costs will all vary from lender to lender and your mortgage adviser will help you to access the best deals for your circumstances. They will also ensure that you are aware of all the different government-backed schemes that you could be eligible for. This process might reveal, for example, that you could potentially benefit greatly from the Help to Buy Equity Loan scheme by securing a new build mortgage on a newly built property.

Don’t underestimate the cost of home ownership

The reality is that home ownership is expensive and if you aren’t prepared for the stacks of bills that will continue to arrive after you have purchased your home, you might be in for a surprise.

In addition to your monthly mortgage payment, you will also need to set aside money to cover things like:

  • Your energy bills
  • Internet connection
  • TV packages
  • Insurances
Your broker and lender will apply strict stress tests when they are determining how much you can realistically afford to borrow, but it is also worth ensuring that you know exactly what your total outgoings will be every month to avoid any sleepless nights questioning how you are going to pay for everything.

Don’t forget, you will also need to keep on top of the general maintenance of your property and if you want to undertake any improvements or renovations, you will need to factor this into your budget.

The value of Mortgage Advisers

The mortgage market is awash with different deals, each with varying term lengths, deposit requirements and fees. There is a great deal of information to get your head around and it can be all too easy to end up signing on the dotted line only to realise later that you were eligible for a better deal that is more suited to your needs.

Our experienced mortgage advisers will take you through everything from interest rates to deposit requirements and run through what your monthly outgoings will look like for a variety of suitable mortgage deals.

To do this, your adviser will look at both your circumstances and interest rate developments and draw upon their knowledge to provide you with personalised advice that should give you the confidence that you are making the right decisions.

Remember, advisers have a comprehensive understanding of the marketplace and although it is impossible to accurately forecast which direction future rates will move in, the advice of a good adviser is invaluable if you want to secure the best possible deal.

If you are looking to secure a first time buyer mortgage and have any queries or questions you would like to pose to a mortgage expert, why not contact The Mortgage Hut today on 02380 980304 or make an online enquiry.

Looking for a Mortgage?

Find out if you're eligible in a couple of clicks, with no hidden credit checks.

With interest rates rising, speak to an advisor today to lock you in with the best deal. Check your eligibility now.