Accumulating savings, especially for a mortgage deposit, can be a challenging task in the current financial landscape. As a mortgage broker in Middlesbrough, we often witness the apprehension of first time buyers navigating the challenges of the home-buying process.
Understandably, concerns revolve around ensuring a favourable credit score, amassing a substantial deposit, and providing adequate evidence of affordability.
Initiating the journey towards a mortgage deposit necessitates a close examination of your monthly disposable income. Begin by assessing your average monthly outgoings to estimate the amount available for deposit savings.
Typically, a minimum deposit of 5% of the property’s value is required, though some first time buyers in Middlesbrough opt to save up to 20%. A larger deposit translates to lower monthly mortgage payments, with 15-20% potentially required for those with poor credit.
Government-led schemes offer avenues to boost or facilitate saving for a mortgage deposit. Shared Ownership is a popular option, allowing you to mortgage a percentage of the property, thereby reducing the initial deposit.
Other schemes, such as the Lifetime ISA, first homes scheme, and mortgage guaranteed scheme, provide additional support. Exploring eligibility for these schemes can be instrumental in starting your first time buyer journey in Middlesbrough.
Gifted deposits, contributions from family or friends that are not repaid, can significantly augment your mortgage deposit if you are fortunate enough to receive one.
Conducting an audit of current bills and subscriptions, seeking potential savings or cheaper alternatives, contributes to increasing your monthly deposit fund.
Purchasing with a friend or partner is a common strategy among first time buyers in Middlesbrough, effectively doubling savings.
However, caution is warranted to avoid financial complications, especially if the other party has adverse credit. Different mortgage types cater to co-buyers, ensuring clarity on ownership and responsibilities.
Joint mortgages with equal ownership involve both parties owning the entire mortgage, with shared responsibility in decision-making. In the event of one party’s demise, full ownership transfers to the surviving owner.
Multiple ownership with specific shares allows flexibility in property ownership. Shares do not need to be equal, and future selling or gifting of shares is possible as each owner is recognised separately by the lender.
Bad credit may necessitate a higher deposit, often in the range of 10%-15%. Savers with adverse credit may need a more extended saving period or can work on credit improvement strategies.
Improving your credit score is key when saving for a deposit with bad credit. Registering on the Voter’s Roll is one effective step, ensuring alignment of addresses across various financial interactions for a reliable credit history. Regularly reviewing and correcting details can enhance your creditworthiness.
Utilising your credit card to its limit and not settling the balance each month can adversely impact your credit score. Opting to use a credit card responsibly, coupled with consistent full payments, is a smart strategy.
Continuing with the credit card theme, it’s important to meet payment deadlines and ensure sufficient funds in your account when payments are scheduled. The more steadfast you are in adhering to these practices, the more positively they contribute to enhancing your credit rating.
Credit accounts that are dormant and have no foreseeable use should be closed down. Keeping such accounts open might be counterproductive to your credit file.
Additionally, if an outdated address is associated with any of these accounts, it could exert a detrimental influence on your credit score. This advice extends to store accounts; if they’re not in use, it’s advisable to close them.
Financial associations with individuals possessing a poor credit history can have adverse repercussions on your credit score. This circumstance is often encountered post-divorce or separation, where former partners remain financially tied, mutually affecting each other’s creditworthiness.
For those embarking on the journey of saving for a mortgage and seeking mortgage advice in Middlesbrough, our team at Middlesbroughmoneyman is here to help you.
Recognising that the initiation of the mortgage process can be overwhelming, we offer our expertise with over 20 years in the industry. To commence your journey, simply book online or contact us to arrange a free mortgage consultation with one of our experienced mortgage advisors in Middlesbrough.
Date Last Edited: December 12, 2023