Taking that primary step towards becoming a first time buyer in Middlesbrough can be quite a stressful concept, especially if aren’t quite sure of what you need to be doing.
Whilst this is a common thought process, we’re here to reassure you that this doesn’t need to be the case! You should be as prepared as you can be, in order for you to make the absolute most of your home buying experience.
Below we have put together 9 questions that you can ask when buying a house as a First Time Buyer.
It’s always good to consider a property before you commit to purchasing it, as a mortgage will likely be the largest financial commitment you ever make.
One thing to ponder, is just how much interest has actually been shown in this property. If it is not quite so popular, you can afford to give yourself time to decide.
If it is a popular property, you may have to make a decision sooner rather than later.
A property chain will occur if there are multiple property transactions happening at the same time, relying on every sale and purchase being completed.
If the property you are purchasing is a part of a chain, this can significantly affect your mortgage process.
For new homes that don’t have a property chain, you may have an increased chance in your process moving quicker, as you won’t be waiting on anybody to go ahead.
First time buyers in Middlesbrough especially have the advantage, as even if there is a small chain, they don’t have to sell a property to begin with in order to move in. This is a good thing to mention when negotiating on property price.
You’ll quite commonly find that when you buy some homes, the previous owner will have left a variety of items behind.
Items that can be found left behind, include potentially electronic goods such as washing machines, fridges or freezers, as well as maybe leaving a shed in the garden. This won’t apply to new build properties, as they tend to be built on the conditions agreed upon prior to the work commencing.
The advantage of this for first time buyers in Middlesbrough, is that if you don’t have to purchase the items yourself if they are left behind. The downside is if you don’t want them, you have to pay to get rid of them.
In the circumstance where you buying a new build property, there might additional items you can buy that can be fitted and ready on the day you move in.
Something else you’ll want to consider and may affect your decision, is what the neighbours are like. Are they good or bad, is it a quiet area or are there anti-social locals? Finding this out can be handy ahead of time.
If you are moving into a new build property, then you and your neighbours will be the ones who are building up a new community, which can make it risky as you won’t know what anyone is like in advance.
When it comes to the costs of running the property, it will depend on where the house is. Asking the right questions can help you to learn more about this prior to purchasing a property.
Make sure you find out things like how much the Council Tax generally is, the usual utility costs and things like that. This can help you budget from property to property.
The direction that your house is facing can also be a big factor in your decision to purchase a property or not. Some prefer to be able to relax during the summer evenings in the garden, reading a book or having a drink.
South facing gardens often can cost quite a bit more than regular gardens, due to them getting more sunlight than others.
This is something else that could be a factor you’ll need to think about, as this could impact your budgeting for the property. Here are some of the most common things to look for;
The house buying process will typically start with property price negotiations. It is important that you are as ready as you can be ahead of time, so that you can make an offer on a property that you really like.
If you would like to learn further about the best ways to improve your chances during negotiation, please see our How to Make an Offer article. As soon as you are “mortgage ready”, you can get started with making offers.
The best way we’d say to determine whether or not an offer is potentially too high, we’d recommend having a chat with the seller themselves or perhaps the estate agent, to discuss previously made offers that have been rejected.
Having a date in your diary can help you to plan other tasks you need to do around the big move. You might need to instruct a conveyancing solicitor, pack everything up, move your belongings.
Knowing the date you could possibly move from speaking to the seller will help you to manage all these tasks, being much more organised and much less stressed as your process continues.
In the beginning of the mortgage process, you’ll very quickly realise that there are lots of different options available to you as a customer. Below we have put together a list of the most popular types of mortgages available on the market, hopefully answering any questions that you may have. If you would like to speak further with a mortgage advisor in Middlesbrough regarding any of these, please do not hesitate to Get in Touch.
A fixed-rate mortgage is a simple form of mortgage wherein your monthly payments are going to stay the same for a set period of time. You are able to set the length of which you want to fix your payments for yourself, with standard choices being 2, 3 or 5 years or sometimes longer. Even if there happen to be any major changes to inflation, interest rates or the economy, you know that your mortgage payment, usually your biggest outgoing, will stay consistent.
A tracker mortgage will follow the Bank of England’s base rate. What this means is that the lender that you are with does not actually set the interest rate themselves, thus making it potentially unpredictable due to the potential for it to change. You will likely be paying a percentage above the Bank of England base rate. An example of this would be if the base rate is 1% and you are tracking at 1% above base rate, that means that you will be paying a rate of 2%.
By taking out a repayment mortgage, this means that each month you will be paying back a total combination of capital and interest. Providing that you keep your payments going for the full length of the mortgage term, the mortgage balance is almost certainly going to be paid off at the end and the property will become yours.
This is widely considered to be the most risk-free way to pay your capital back to the lender, especially as in the early years it is mainly the interest that you are paying and your balance will reduce at a slightly slower pace, especially if you have taken out a term over 25, 30 or 35 years. Your circumstances will change within the last ten years or so of your mortgage, as your payments will be paying off more capital than interest and the balance will come down at a quicker pace.
Whilst many Buy to Let mortgages in Middlesbrough are set up on an interest-only basis, taking out a regular residential mortgage in the form of interest-only is a lot more difficult and not seen as often.
It is a lot less likely for lenders to offer an interest-only product to applicants these days. That being said, there are very particular circumstances where this can be an option. These options can include downsizing later in life or to use the capital to pay off other investments. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than they used to be.
With an offset mortgage, the lender will set you up a savings account to run in tandem with your mortgage account. This is quite in an interesting one in how it works. Let’s say you have a mortgage balance of £100,000 and £20,000 is transfered into your savings account; you would only be paying interest on the difference between the two amounts, so in this case it would be £80,000. This can be a very efficient and financially savvy way of managing your money, especially if you are a taxpayer with higher rates.
A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender.
Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.
This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Middlesbrough will be able to look at, to see if you qualify.
All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.
95% mortgages are usually accessible by both First-Time Buyers in Middlesbrough & those who are Moving Home in Middlesbrough. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.
A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.
Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.
Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage.
When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation.
Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.
Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.
Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not.
There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as.
A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property.
So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future.
Rishi Sunak’s second Budget as Chancellor brought two pieces of welcome news for the property sector as the Government attempts to transform “Generation Rent” into “Generation Buy” to help stimulate the UK economy, namely the new 95% Mortgage Guarantee and an extension of the Stamp Duty Holiday.
The name of this scheme is misleading as not everyone that applies is guaranteed to be offered a mortgage, it is still subject to affordability and credit score. The “guarantee” itself is that the Government will ensure Lenders don’t stand a loss if they grant a 95% mortgage to a customer who then subsequently falls into arrears and is repossessed leaving behind negative equity.
This scheme should in theory give Lenders more confidence to lend even though the applicant only has a smaller deposit to put down. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements!
The scheme is available to both 1st Time Buyers and Home Movers, it’s available on any property (not just new build) and will run until December 2022. Some major High Street Banks have already signed up to the scheme and it’s likely more will follow later on. It’s still a big challenge for Lenders to cope with the demand they are getting for mortgages due to the difficulties training and supervising staff working from home but they will want to offer as many of these mortgages as they can.
When the Stamp Duty Holiday was launched last year we all hoped life would be very much back to normal by the cut-off date of 31st March 2021 but things didn’t pan out that way as we know. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the object of the exercise.
Therefore it was good to hear the scheme has been extended to 30th June for purchases up to £500,000 and 30th September for purchases up to £250,000.
The Government certainly sees the property sector as an area that can play a big part in our economic recovery and if you are looking to buy a home or remortgage this year please reach out and we will be happy to advise you.