First Time Buyers

Buying your first home is a steep learning curve. Not only do you have to make several key decisions but you also have to learn a whole new language of house buying and mortgages. You will also get the fun of dealing with estate agents, mortgage brokers, sellers, mortgage companies, solicitors and if all that goes well, the removal men.

Stirling Partners Finance will help you navigate this process over the time period leading up to your first home purchase.

If you are already renting a property you are in for less of a culture shock as you are already familiar with most of the domestic expenditure that takes the gloss off having your own place. You will also have gone through the property selection process already.

If you have been living with parents you may need to be a just a bit more thorough in assessing potential expenditure.

There are so many questions and answers to consider that a meeting with one of our mortgage advisers is highly recommended. You may even need a couple of meetings before making a decision.

Main considerations

Why am I buying a home?

This is an important question as it may identify if you are making the right decision from a timing point of view. Sometimes a slight delay can make good sense if it will help you buy a more suitable property. Sometimes stretching yourselves a little may make sense if it helps you avoid having to repeat the house buying process within a short space of time if for example you are planning to have children.

How much can I afford?

By careful budget planning you will be able to forecast how affordable your new home will be and ensure you have some funds left to enjoy life.

How much can I borrow?

Different lenders calculate this in different ways. They use devices known as affordability calculators, credit scoring and income multiples. Some will help out graduates and professionals, others will allow parents or relatives to help by acting as guarantors.

How much cash will I need?

You may need funds for a deposit, stamp duty, furniture, moving costs, professional fees, valuation fees, mortgage fees etc. Planning your cash requirements is obviously an important consideration.

Where shall I live?

Points to consider include:

• Is the property convenient for traveling to work?
• Will it meet my/our needs further down the line? (Children are an obvious consideration here)
• How much will you need to spend to be comfortable living there?
• Will it need much maintenance or money spent on it in the next few years?
• What is the neighbourhood like?
• What are the local amenities and schools like?
• How easy will the property be to resell?
• Can you improve the value of the property in any way?
• What are the future plans for the area and how will these affect house prices?

It is good to visit a property a few times at different times of the day and it is good to get the views of an experienced person. All of this helps to build up a balanced opinion. It is also helps to view similar properties to help assess value for money. Most importantly keep asking questions.

Which mortgage should I have?

Your adviser will work out which lenders are available to you and help you select the most appropriate mortgage from their product ranges. Relevant questions will include;

• How long do you intend to keep the mortgage/property?
• How much can you afford to pay each month?
• Do you want the security of fixed outgoings for a period of time?
• Are you planning any over payments?
• Will you need to borrow more money further down the line?

When the adviser has the answer to these and other questions he or she will draw up a short list of the most appropriate mortgages and recommend the best one after consulting with you.

How shall I repay my mortgage?

Most mortgages today are arranged on a capital and interest basis known as a ‘repayment mortgage.’ This basically means that your mortgage payment consists partly of a repayment of capital and partly of a payment of interest. As the loan progresses the proportion of the payment that repays capital increases until in the final years hardly any of your payment goes towards paying interest. At the end of your selected mortgage term the loan is cleared.

The second type of repayment strategy is commonly called ‘interest only.’ Here normally your only obligation to the lender is to make interest payments each month but you then independently plan how you will obtain funds to clear the debt. Common methods include;

• Using an investment(s) such as an ISA, endowment, pension or share portfolio
• Overpayments on a flexible basis from bonuses etc.
• From inheritance
• From eventual sale of the house in question
• From the sale of other assets.

A word of caution

Some people may take out an interest only mortgage with no clear plan to pay off the debt. They may do this because it’s cheaper than paying rent and because they expect house prices to rise. Clearly house prices are not guaranteed to rise and will probably fall at some point. Having no clear plan for paying off your mortgage is a high risk strategy if you have little value in your home and the market suffers a downturn, as it could leave you in negative equity with no easy way of moving home. Clearly if you never repaid your mortgage it could eventually leave you in a homeless position.

Protecting your mortgage and home

Most people are potentially vulnerable to things going wrong that could affect their ability to keep up mortgage payments and could result in a poor credit rating or even worse the loss of their home. Some of these risks can be comprehensively covered with insurance. Your adviser will help you to work out which insurances are worth considering.

For further reading see Mortgage Protection

How are we paid?

Any initial consultation will always be free of charge. Thereafter, we will agree with yourselves how we will be paid for the work that we do on your behalf. On many occasions we will receive a commission from a lender or insurance company. In addition to, or in substitution of this we may charge a fee of up to 1% of the loan amount. For example a fee of £1000 would be payable for a loan of £100000.

The fees we most often charge range between £0 and £500. All fees are notified in writing and agreed with yourselves before any work commences.

Contact Us

Please contact us to see if we can help on 08700 11 33 22 or by using our contact form.

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