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First time buyers

New government backed loans and other purchase assistance schemes have helped to make owning your own home a more realistic prospect. Buying your first property can be an exciting yet daunting prospect, but with good advice at an early stage, and a sensible approach, taking your first step on the property ladder can become that much easier.

How do mortgages work?

Since the recent financial crisis, lenders are required to be more thorough when assessing whether or not the borrower will be able to make their repayments. So when applying for a mortgage, you will need to satisfy the prospective lender that you will be able to comfortably keep up the repayments, now and in the future.

For more information on mortgages, read our guide to getting the right mortgage.

What help is there for first time buyers?

There are a number of schemes available for first time buyers to make buying your first property more achievable. You can find out more about these, including London Help to Buy, in our government and other purchase schemes advice.

Other types of mortgages are available to help first time buyers and talking to a mortgage broker with access to the whole of the market will help you understand all available options. KFH’s specialist mortgage and protection advisers have access to the wide mortgage market in order to provide first time buyers with a choice of products and lenders that are right for you.

What other costs should I be aware of?

There are a number of other upfront costs involved in buying your first property aside from the deposit and mortgage repayments. These include mortgage set-up fees, property solicitors’ fees and Stamp Duty Land Tax (SDLT). The full costs of buying a property are explained in our guide.

Prepare your finances

To give yourself the best chance of buying a home you should get your finances in order. Keep up repayments with any credit cards and loans and start saving. If you can demonstrate good money management, lenders will like to see it. You may find it easier to save money if you create a personal budget. By looking at your income and carefully planning your spending, you will stand a better chance of saving enough for a deposit. You will also be a more attractive borrower to any potential mortgage providers.

You may be fortunate enough to have parental assistance for a deposit, where a gift can be made to the buyer in the form of a cash lump sum. This will require an accompanying letter from the parents confirming it is a gift.

Beyond a gift to help with the deposit, if parents are prepared to take on some of the risk of the mortgage, then the lender may feel more comfortable approving the child’s mortgage. Parents can act as guarantors, ensuring that repayments will be made even if their son or daughter is unable to make them. Another arrangement is for parents or grandparents to offer their own homes as collateral against their child’s mortgage. This gives the lender greater confidence that the loan can be recouped.

Parents can also set up a savings account from which mortgage repayments will be made if their child is unable to make them. In an ideal scenario, the child will make all the required payments and when a set amount (around 75%-80%) of the mortgage is paid off, the parents can withdraw their savings, which may have accrued interest.

Your home may be repossessed if you do not keep up repayments on your mortgage.

We do not charge for our advice. Instead, we simply charge a fee for arranging your mortgage of up to 0.5% of the mortgage amount. A typical fee is £499.

We source from the whole of market with the exception of bridging loans and second charge mortgages.

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