First time nerves - How to get on the property ladder

Today’s housing market is moving really fast, so for many first time buyers, getting a foot on the property ladder can seem like an impossible task. Yet it’s not all doom and gloom for those trying to clamber onto the bottom rung, the trick is to know what your options are and to do your homework. With that in mind, McDermott Homes have put together this guide to help you get that first home.

Get your sums right

The first thing on any potential home buyer’s to-do list should be to work out exactly how much they can borrow. This varies between lenders but is usually around 3 times annual earnings, or 3.5 times joint annual earnings if buying as a couple. Mortgages are usually repaid over 25 years but some lenders now allow repayment over 30 or even 40 years. This reduces the monthly payments – good for most first timers but incurs a higher interest rate, meaning buyers pay more in the long term.

For those struggling to raise a deposit for a property, it might be worth considering a 100% mortgage. These are useful as they allow buyers to move into the market straight away, rather than waiting to save up the funds – a challenge that can sometimes take years. This type of mortgage is riskier than others as it involves such a high loan-to-value investment and means borrowers can be vulnerable to rises in interest rates. To minimise this risk, it’s best to opt for a fixed rate mortgage, rather than a tracker as this could lead to unaffordable repayments if interest rates go up.

Choosing the right mortgage to suit your needs is crucial to buying your own home and it can be a confusing decision if you’ve never been through the process before. McDermott Homes work with a range of independent financial advisors that can offer free advice to help turn the dream into a reality.

Club Together

If buying a house still seems out of reach, then why not join the growing number of friends choosing to club together to purchase a property. This not only increases the borrowing power of buyers but makes the associated costs of owning a home more affordable. Many mortgage lenders now offer group mortgages but these are still slightly more complicated than buying alone or as a couple.

When buying in a group, it’s important to establish from the beginning what will happen if someone wants to move out, and to get a solicitor to record everyone’s share in the property, including deposits. It may seem un-trusting, but even the best of friends have falling outs, so it makes sense to ensure everyone’s interests are protected.

Another thing to remember is that most sharers will want to resell within a few years so it’s important to be realistic about maintenance costs – a property that needs a lot of expensive upkeep is not really suitable. A new build property from McDermott Homes is perfect for sharers looking to the future, as it will hold its value better should the market dip.

It’s also essential to think about the location of the property. An up and coming area is the best option and a good quality new development, such as those offered by McDermott Homes, is an excellent way of finding these.

Bank of Mum and Dad

Many parents are keen to help their kids get a foot on the ladder but most are unsure of what they can to do to help it they are not in a position to invest large sums of money. One possibility is that the parent can act as guarantor on the loan, allowing the child to increase their borrowing potential. This means that if a child is not able to borrow enough for their property, the parents’ income can be taken into consideration and they act as guarantor for the extra amount needed. However, the parent is then responsible for making sure that the mortgage repayments are met.

Another option is for the parent and child to apply for a joint mortgage, similar to those offered to groups of sharers. This would mean that the parent owns a share of the property and is therefore jointly responsible for the mortgage repayments. If the parent is not living there, they will also be subject to capital gains tax.

Settle In and Break Out the Bubbly

Buying your first home is a daunting challenge and it can be easy to get down hearted if it seems out of reach. But there are ways of making it happen, and the challenge will seem worth it when you’re settling into your very own home.

McDermott Homes have a range of homes that are perfect for taking that first step into the property market. With a reputation for generously sized accommodation and value for money, the company has expanded rapidly throughout the North West region and has a development to suit every need.

For more information about McDermott Homes, visit mcdermott-homes.co.uk.