5 things you should know if you’re a first-time buyer in 2019

22nd August 2019

couple with packing boxes looking out a window

There are plenty of doom-mongers out there who’ll have you believe that buying your first home has never been more difficult.

We disagree - there are lots of first-time buyers getting on to the property ladder. In fact, the latest figures reveal there were 30,720 new first-time buyer mortgages completed in May 2019 - up 0.5% on the same month last year. (1)

So if you’re thinking of joining the club, here are five things you should know before taking the plunge.

1 – The Help to Buy ISA is coming to an end

The Help to Buy ISA scheme is due to close to new savers on 30 November 2019, so get moving if you want to apply for one. (2)

When you invest money in a Help to Buy ISA, the government will top up your contributions with a 25% bonus.

You can get a maximum bonus of £3,000, though you’ll have to have saved £12,000 to get it.

2 – In an uncertain world, consider a fixed-rate mortgage

As we hurtle towards a potential no-deal Brexit, what happens to the UK’s economy is anyone’s guess.

So it’s a good idea to think about a fixed-rate mortgage.

That way your payments will stay the same even if the Bank Rate goes up, so you can budget accordingly.

There are loads of fixed-rate mortgages on the market, and it can be confusing to work out which one’s best for you. So if you’re not sure, get some free advice from a mortgage broker.

3 – Credit score is king

If you’ve been doing your research, it’ll come as no surprise that your credit score is hugely important when applying for a mortgage.

There are various tools, such as ClearScore, Experian, and Equifax, that allow you to check your credit score - many of which are free.

There are also many ways you can boost your rating too, from setting up controlled credit card payments to paying your heating, water, and phone bills in a timely fashion.

You can now even use rent payments as a credit score booster. Simply opt into the Rental Exchange initiative, which is free, and these will appear on your Experian credit report.

4 – Leaseholds on new-build houses to be banned

Unfortunately, some first-time buyers of leasehold new-build houses have been stitched up by unfair terms and conditions.

This should soon be a thing of the past as in June 2019 the Government announced that all new houses are to be sold on a freehold basis. (3)

Homes England, which funds new affordable housing, has been told to renegotiate the contracts for Help to Buy to rule out selling new leasehold houses, except in exceptional circumstances.

Help to Buy is the equity loan scheme available to first-time buyers (and existing homeowners) to buy a new-build house.

5 – There may be another way

There's a number of new and innovative ways to get on to the property ladder.

Take the start-up Unmortgage, for example. They allow you to buy your home with the money you have, move in and then pay the rest off gradually.

As long as you’ve got a minimum of a 5% deposit, and your combined household income is £30,000 or more, you can strike an arrangement with a ‘funding partner’ to get the sale over the line.

There are plenty of other unique ways to buy your first home emerging, so look around for your best option.

Sources:

1. UK Finance

2. GOV.UK

3. GOV.UK

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