As first-time buyers, we understand that purchasing a property may seem daunting and unattainable. Therefore, we have simplified the initial stages and provided information on what you should do and the assistance available to help you purchase your first home, as the title “New Homes And What FTB Should Know” suggests.
Buying a property may seem challenging, but purchasing your new home and being able to customise it is worth it. However, before making a purchase, there are many factors to consider, such as;
- The required deposit,
- Mortgage rates,
- Eligibility for a mortgage.
Finding a mortgage adviser who can help you facilitate the process is essential to that endeavour. They can assist with everything from arranging for DIP, which you can provide to the estate agents/builder as proof that you are serious about purchasing the property.
What is a DIP?
For new homes and what FTB should Know: A Decision in Principle (DIP) is an indicator from your mortgage lender that gives you an idea of how much they might lend you for your mortgage.
A Decision in Principle is sometimes also referred to as:
- an Agreement in Principle
- a Mortgage in Principle
- a Mortgage Promise
It is important to note that it is not a legally binding agreement and may be subject to change after a thorough evaluation of your mortgage application. The DIP may require a soft credit check, but it won’t impact your credit rating.
Obtaining a DIP helps you to better prepare for your house hunt. It gives you a clear understanding of your budget and allows you to demonstrate to estate agents/builders that you are a committed buyer. The things related to “New Homes And That FTB Should Know.”
Get in touch with a conveyancer.
For new homes and what FTB should Know: When you buy an existing property and accept the offer, exchange and completion usually take longer than a new build purchase.
Purchasing an existing home can involve a chain of multiple transactions where the success of each transaction depends on the others. In contrast, buying a new build directly from the developer can avoid delays and obstacles caused by such chains.
New builds can be moved quickly, depending on how efficiently the administrative process goes for first-time buyers. Purchasing a new build can avoid complications from existing owners changing their minds about selling or accepting higher offers from other buyers after accepting yours (known as gazumping).
Buying existing homes can take longer because surveys may identify issues like dampness or a damaged roof that need to be repaired or negotiated before the purchase, thus delaying the process.
Choosing a conveyancer or solicitor before reserving a property at the latest is necessary. This professional will handle legal matters like searches, planning permission, and access to roads and sewers. Therefore, it is recommended that you select one even earlier.
The developer may suggest that you select a solicitor or conveyancer from their approved panel. Although not mandatory, opting for a solicitor familiar with the developer and their paperwork might accelerate the buying procedure.
Save a big enough deposit to get the best rates.
For new homes and what FTB should Know: Although a 5% deposit is the minimum requirement, it is advisable to consider putting down a more significant amount if you have the financial capacity. A larger deposit will result in a broader range of mortgage products and increase your chances of securing lower mortgage rates.
Mortgage advice on mortgage type, mortgage term and new mortgage products
In addition to the mortgage rate, it’s crucial to consider the type of mortgage – fixed or variable – and how long you want the mortgage term to be. While it’s typically 25 years, some people choose 35 years to make monthly repayments more manageable. Mortgage brokers can inform you about new mortgage products such as Deposit Unlock or Green mortgages and help you understand their advantages and disadvantages.
By working with a mortgage broker, you can benefit from their experience and knowledge to find the most suitable mortgage for your situation at the most affordable rate possible. They can provide valuable guidance when you are new to the mortgage market and help you explore different options. Additionally, they may connect you with lenders you may have yet to learn about but who offer the best mortgage product for your needs. This is something to consider for new homes and what FTB should Know.
Shared ownership could be an option.
This is perhaps one of the things that FTB should know about new homes. To make purchasing your first home easier, consider a shared ownership scheme. Housing associations and private developers offer these schemes where you can buy a portion of the property and pay rent on the remaining share. You can choose to buy more shares of the property when you have the funds available.
Typically, the properties are leasehold, meaning you must pay a monthly service charge and contribute to significant maintenance works. Moreover, purchasing additional shares can be quite challenging; therefore, it is advisable to fully comprehend the process and associated costs before engaging.
Budget for additional fees and costs
New Homes And What FTB Should Know
It’s important to remember that there are additional expenses beyond the deposit and mortgage when purchasing a house. To be prepared, make sure to budget for these extra costs. Some other fees to keep in mind include the following:
- Conveyancing fees
- Mortgage valuation fees
- Arrangement fees
- Stamp Duty on properties over £300,000 (under this price is free for first-time buyers)
- Survey of the new property
- Removal costs
- Fixtures and fittings costs
- Home Insurance
For new homes and what FTB should Know, creating a written list or a spreadsheet for your budget can help ensure that you stay caught up on covering essential costs.
Types of mortgage
A range of options is excellent for managing your finances; luckily, various types of mortgages are available.
- Repayment: You repay the amount you borrowed, with interest, over a set term
- Interest only: You only pay back the interest on your loan each month, then pay the total amount you borrowed at the end of the term.
Repayment mortgage types
Repayment mortgage types are a great way to pay off your mortgage quickly. Depending on your financial goals, timelines and budget, you can choose from the following repayment types;
- Tracker: The amount of interest you will pay monthly is subject to change based on the Bank of England’s base rate.
- Offset: You will be charged interest on the borrowed amount, but any money in a linked savings account will be deducted before calculating the interest.
- Fixed-rate: Your monthly interest rate will remain constant for a fixed period that has been agreed upon.
Seee past your initial thought of whether you can actually purchase a new home. Only when you explore can you definitively find out what is possible? A mortgage broker could provide you with the news you never thought you would hear or advice that could make a difference when the time or circumstances is right.
Given that you are a first-time home buyer, having a mortgage broker helps navigate what may seem like a complex process. They are a valuable resource who can explain the different types of mortgages available and help you decide on the best product to suit your needs. In addition, they possess the skills and experience and have access to the information required to purchase a new home mortgage. And we’ve ended the “New Homes And What FTB Should Know” guide.
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