Here are your first steps…

If you have a substantial deposit:
So you’ve saved up or been gifted a sizeable deposit? Excellent! Now you just need to figure out what to do with it. Buying your first property is one of the biggest financial decisions that you will make in your lifetime – so you’ve got to get it right.

Start off by doing some really good research into the world of mortgages and money, because that’s what it’s all about. Then you need to have a good look at your own finances. No bank will lend you money if you have a bad credit score so if those credit cards need paying off, now is the time to do it. Once you’re confident you have your affairs in order it’s time to see who has the best interest rates for your deposit – shop around like you would do with any big payment.

Mortgage interest rates fluctuate quite a lot depending on which banks can get their hands on the cheapest money to lend. They usually get it from savers or by borrowing from other banks on the money markets, so they’re affected a bit like stocks and shares.

Instead of doing all the legwork and research yourself you can actually invest in a mortgage advisor who will guide you through the process and show you the banks with the best interest. Mortgage advisors can end up being quite pricey though so if you have the time, it’s best you look into it yourself.

If your deposit is a bit on the low side:
So, you’ve saved up what you can, but you’re worried it’s not quite enough to get you onto the sought after housing ladder. Don’t panic – you probably still have a valuable amount! In the UK, the government supports first time buyers with the help of certain schemes. Essentially, you can put as little down as 5% – that’s only £7,500 for a £150,000 house – so you can get a lot for your money. The Help to Buy Mortgage Guarantee scheme actually ended at the end of 2016 but there are other initiatives to help you as a first time buyer.

These include the Help to Buy Isa which is a tax free savings account that you can pay money into that will earn interest. When you decide to buy your first home, the government will add a 25% bonus to what you have saved. You could also go down the Equity Loan route, where the 5% deposit comes in. With an Equity Loan, first time buyers and those looking to move can borrow 20% off the government to go towards a new build property. You will need your 5% deposit and a 75% mortgage repayment to make up the difference – this scheme is quite complex so look into it in depth before you take the plunge. Another option is Shared Ownership that allows buyers to purchase a 25-75% share of a newly built home or an existing one through a resale programme then you will have to pay the rent of the remaining share.

2017 presents starter homes:
The Starter Homes initiative has been recently announced. This is exciting news for first time buyers under the age of 40 as the initiative is aimed directly at them. After a nice big injection of funds to the housing wallet the government plan to build around 200,000 homes that are affordable to first time buyers. To make this possible, the properties are going to be sold at 20% below their actual value and to make it worth their while as well as yours, you have to live in them for five years before you can put them on the market – otherwise it would just be a great investment for you.

Although the plans are on the horizon, 2017 might not be the best year to get excited about it as Starter Homes are aimed to be finished by 2020.

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