Getting a mortgage for the first time can be quite a daunting process – but not if you have the right advice and support. Here, Helen Pierson from The Mortgage Bureau answers some of the questions you might have about borrowing to buy your first home…
Is there a minimum income which you need to buy a home on Help to Buy?
There’s no minimum – you just need to make sure that what you earn gets you the mortgage you’ll need in order to buy. Generally this is 75% of the property value, so if the sale price is £150,000 you would need a mortgage of £112,500. Most lenders will calculate what you can borrow by multiplying your income by 4.5 – after deducting any loans and credit card balances.
Can I afford to use Help to Buy if I am single?
Lots of single people have bought their first home using the Help to Buy scheme. Again you just have to check that what you earn is going to be enough to get the mortgage that you need. There are plenty of ways to find this out, and perhaps the best way is to seek advice from a specialist new build mortgage broker. They’re not scary, or expensive, in fact most will give you advice completely free of charge. For details of firms that are recommended go online and search for your local Help to Buy Agent, their website will provide a list of Mortgage Advice firms that provide a specialist free service in your area.
I don’t think my credit rating is good. How can I improve it?
Try and ensure that you make the minimum payments on any loans or credit cards you have and that these are paid no later than the specified due date. Late or missed payments will lower your score. It’s also a good idea to make sure that you are on the electoral roll. You can apply to be added online here - it only takes five minutes! Sometimes not having any credit can be an issue, in which case taking out a credit card with your bank and using it for small purchases, such as food or petrol, which you pay off monthly will help build your score. Remember that lenders are looking to gauge your “attitude to debt”, and having a track record of paying what you owe is the best way of demonstrating that you’re a “good payer”. And even if you’ve had problems in the past, remember that it’s never too late to start making things better.
Other things that can affect your score include having too many lines of credit and too many credit searches against your name in a short period of time, so resist over-usage of comparison websites for things such as car/holiday insurance – every quote leaves a search – and, if you’ve got multiple credit cards, close down the ones you don’t use.
What are your top tips for increasing my chances of getting a mortgage?
- Don’t over commit yourself financially before you apply for a mortgage. Lenders will discount income that they know you will need to repay your existing debts before working out how much you can borrow.
- Ensure that your passport hasn’t expired and if you drive that your licence is registered to your current address, as lenders may ask to see these.
- Keep your bank statements, and don’t max out on your overdraft each month – lenders are keen to see that you can live within your means!
- Save evidence of earning such as payslips and if you’re self-employed make sure that your accounts are up to date with the Inland Revenue.
- Finally SAVE HARD – you will need at least a 5% deposit for Help to Buy. The bigger your deposit, the less you will need to borrow.
What’s the best way to save for a deposit?
ISAs are a tax-efficient way of saving. If you’re buying your first home, save into a Help to Buy: ISA and the Government will boost your savings by 25%. So, for every £200 you save, you’ll get a bonus of 50 quid! The maximum Government bonus you can receive is £3,000. When you buy your first home your solicitor will apply for the Government bonus. For more information visit helptobuy.gov.uk
Is Help to Buy available all over the UK?
Yes, although the terms and conditions do vary between England, Scotland, Wales and Northern Ireland. London has its very own Help to Buy scheme due to the higher cost of housing here.
What services does The Mortgage Bureau offer for people who want to use Help to Buy or Shared Ownership?
We’re specialists in affordable housing schemes, including Help to Buy and Shared Ownership and have a network of over 60 advisers. Every single one of them simply loves talking about mortgages. We’ve already helped 1000s of people buy with the help of these schemes and we pride ourselves on offering jargon-free information, so that you can feel confident about knowing whether you’re ready to take the next step. We’re free of completely free of charge and can look at over 90 lenders – but don’t worry we’ll only pick out the best mortgage deals to talk to you about, not all of them!