Buying your first home is a major step forward in life but it can feel like a long time coming. Between paying rent and saving for a deposit, many people are left feeling like they’ll never make it on the property ladder. However, there’re ways you can fast-track your preparation and make an offer on a property more quickly than you think. If you’re eager to become a homeowner, take a look at these top tips to speed up the buying process.
Work Out How Much You Can Borrow
Virtually all first-time buyers need to take out a mortgage in order to fund their property purchase. You’ll need to know how much you’re eligible to borrow. A home loan calculator is the easiest way to do this. By inputting your income and the deposit you currently have (or can save), you’ll be able to see how much you’re able to borrow from a bank.
It’s important to remember that all lenders have their own lending eligibility and criteria. Most high street banks use the same formula, you’ll be able to get an idea of what you can borrow without making a formal mortgage application.
Increase Your Borrowing Power
If you need to increase the amount you’re eligible to borrow, there are a few ways of doing this. You could lobby for a promotion at work or apply for new jobs to increase your income, for example. Most lenders calculate the amount you’re able to borrow based on your income. So even an annual raise of £5,000 could increase your borrowing power by £20-30,000.
Alternatively, you could pay off some or all your existing debts, so that your expenditure is reduced. Mortgage lenders will want to know how much of your income is already accounted for by way of essential expenditure, such as existing debts, utilities and bills. If you have less debt, you will have fewer outgoings each month and should be able to borrow a larger amount.
Get a Guarantor
If someone acts as a guarantor, they’re essentially taking on some or all of the risk if you default on your mortgage. It gives the mortgage lender the right to pursue the guarantor for any unpaid mortgage repayments, which can make you a more attractive borrower in their eyes.
Typically, a guarantor will need to offer some security, such as their own home or savings. This means that they’re putting their assets at risk in order to help you, so it’s certainly a big ask. However, if your parents, a close family member or a trusted friend is in a position to help and is comfortable taking on the risk, this can be an effective way of speeding up the process of buying your first home.
Relocate to a Cheaper Area
If you currently live in an area in which property prices are high, moving to a cheaper area could be a simple way of buying a home more quickly. In London, for example, property prices are notoriously high, and it can be difficult for any first-time buyers to secure a home. By moving further afield, however, you can benefit from lower property prices and cheaper living costs.
When property prices are cheaper, you shouldn’t need to borrow as much in order to fund your purchase. This means you won’t need to save as much of a deposit, so you can buy your first home sooner. If you’re able to find another job in your new location, work from home or commute into your existing workplace. Relocating can be a good option if you want to get on the housing ladder as quickly as possible.
Discover if You’re Eligible for Support
There’re many great schemes out there, designed to help people buy their own homes. It’s well worth seeing if you qualify for any support or reduction in expenses. Some schemes allow you to put down a 5% deposit, for example, with the government putting down another 20%. Although you’ll need to repay these funds as you pay off your mortgage. This type of scheme can enable you to buy a home much more quickly than if you needed to save up a 25% deposit without any support.
Alternatively, you can use a tax-free savings account to help fund your deposit. A Help-to-Buy ISA is designed to ensure first-time buyers don’t pay tax on the money they’re putting towards a deposit. For example, and can be an efficient way to save for your first home.
Consider Shared Ownership
Instead of buying your first property outright, you may want to consider a shared ownership purchase instead. Generally, you buy between ¼ and ¾ of the property to begin with and pay rent on the rest of your home. Over time, you can buy a larger percentage of the property until you eventually own it outright. In the meantime, the amount of rent you pay is reduced to reflect the increasing percentage of the property that you own.
Shared ownership schemes can help you to get on the property ladder if you’re on a low income. But they aren’t the right choice for everyone. Do double-check whether there are any property maintenance or tenancy fees involved, as this can increase your expenditure. However, if the contract seems fair, shared ownership can help you to fast-track your first house purchase.
Funding Your First Home
As you might expect, funding your first home generally involves saving as much as possible as quickly as you can. By reducing your current outgoings, you could increase the amount you’re able to save each month. Even if means changing your lifestyle on a temporary basis. By making the most of schemes and low interest rates, you can boost your borrowing power and buy your first home sooner than you realize.
Love Lilla xx