Challenges faced by First Time Buyers

Purchasing a property for the first time can be both exciting and overwhelming. First time buyers often face a range of challenges, from navigating complex mortgage processes to finding a property within budget, securing a dream home feels more daunting than ever.

Additionally, understanding the finer details of things such as homebuyer surveys, legal fees, and all the jargon associated with mortgages, can add layers of complexity to the purchase.

Take a look at some of the most common challenges and possible solutions:

Challenge: Increasing Property Prices

Property prices have soared in many areas, making it difficult for first-time buyers to afford a home.

Solution:

Other than the obvious ‘save more’ solution, there are a couple of things you can do to navigate your way through increasing property prices towards your first home:

Government Programs: There are various homebuying schemes available to first time buyers who are struggling to save for a traditional deposit. It is worth taking a look into options that offer financial assistance, incentives or lower deposit amounts. For example, Springboard Mortgages, Joint Borrower, Sole Proprietor Mortgages and Shared Ownership.

Expand Search Area: Consider the area in which you are looking to purchase your home in. Is it generally expensive? Could you look into neighbouring options to reduce the cost? By considering your options on a wider scale, this could reduce your costs and offer possibilities that you might have once overlooked.

Challenge: Strict Lending Criteria

Lenders have become more cautious, requiring higher credit scores and more documentation.

Solution:

Improve Credit Score: Pay off debts, avoid new credit inquiries, and ensure timely bill payments.
Gather Documentation: Prepare all necessary documents like tax returns, payslips and bank statements in advance.
Mortgage in Principle: Get pre-approved for a mortgage to understand how much you can borrow and show sellers you are serious.

Take a look at our blog post on understanding the importance of a Mortgage in Principle.

Challenge: Large Deposit

Saving for a traditional deposit can be intimidating for many depending on your current circumstances, especially with rising living costs. Here are a few things that might help:

Solution:

Budgeting: Create a realistic budget to work towards to help save more effectively.

Track your progress: It is important to note that achieving large savings goals isn’t going to happen overnight. This can be demotivating for some, but by regularly tracking your progress can help you assess how well your savings strategy is working and motivate you to keep going!

Gifted Options: For some individuals it might be possible for a friend or family member to gift a lump sum of money to boost your deposit fund. Speak to family and friends to assess if this option is possible.

Challenge: Hidden Costs

First time buyers often overlook additional costs such as legal fees, homebuyer surveys, possible stamp duty and general moving expenses.

Solution:

Research: To avoid incurring hidden costs, research exactly what costs are associated to your home buying journey.

Budget for extras: Once you have a rough idea of all the costs associated with your specific property purchase, factor these into your budget to avoid stress later on.

Professional Advice: Consult with a financial adviser to understand all potential costs such as homebuyer surveys, legal fees and potential stamp duty.

Challenge: Lack of Knowledge

The mortgage process can be complex and overwhelming for first time buyers, but taking the time to research can make it seem much less daunting.

Solution:

Friends & Family: Speak to your friends and family about their experiences when buying their first home. It can be useful to hear of other people’s experiences to help understand the process and feel less out of your depth.

Professional Help: Speak to a mortgage broker who can guide you through each stage of the home buying process step by step, allowing you to ask questions or clear up any mortgage jargon along the way.

Challenge: Competitive Market

In a competitive market, first time buyers may struggle to compete with experienced buyers and possible investors.

Solution:

Be Prepared: Have all your documents ready and prepared can show the seller you are serious about purchasing the property.

Pre-approval: It can be advantageous to have a Mortgage in Principle before submitting an offer on a property as this shows the seller you can ‘in principle’ afford the property.

Be Patient: It might take time to find the right home, remaining patient is key.

Conclusion

Buying a home for the first time can be challenging, but with the right preparation and resources, it is achievable. By understanding the obstacles and taking proactive steps, first time buyers can navigate the mortgage process more smoothly and find their dream home.

Talk to us today to discuss your options as take that next step towards homeownership.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 03.10.2024

The Mortgage Society is a trading name of Just Mortgages Direct Limited which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority.