Top Mistakes First-Time Buyers Make When Applying for a Mortgage

Your Essential Tips

Buying your first home is really exciting, but there are some common mistakes that buyers make that can hold their plans up. So, to help you out, here is some essential mortgage advice for first time buyers, along with pitfalls that you should try to avoid.

Not Checking Your Credit Score Early

One of the most critical factors in getting approved for a mortgage is your credit score. Many first-time buyers fail to check their credit scores early in the process. While there are mortgages available for buyers with bad credit, it makes sense to know what your score is before you begin the application process. It’s a good idea to check your credit score several months in advance. This gives you time to correct any errors on your report and begin to improve your score if needed.

Underestimating the Importance of a Deposit

A common mistake is underestimating the size of the deposit required. Lenders typically require a deposit of at least 5-10% of the property’s value, but larger deposits can secure better interest rates and terms. That’s why it’s vital to save as much as possible for your deposit. Open a savings account if you don’t already have one, and have a chat with the advisors at your bank to see which account will best align with your savings goals.

Overlooking Additional Costs

First-time buyers often just focus on the property price and mortgage repayments, overlooking other costs involved in buying a home. These include stamp duty, legal fees, survey costs and moving expenses. So be sure to create a comprehensive budget that includes all potential costs. Research and plan for these expenses early to avoid financial strain later. It’s better to be too prepared than not enough, and anything left over can be put towards things like home improvements.

Not Considering Different Mortgage Types

There are various types of mortgages available, such as fixed-rate, variable-rate and tracker mortgages. First-time buyers often don’t explore their options and end up with a mortgage that isn’t particularly suited to their needs. The solution? Research different mortgage types and consider your financial situation and future plans. A fixed-rate mortgage offers stability with consistent payments, while a variable-rate mortgage might offer higher initial rates that could go down later.

Ignoring the Benefits of a Mortgage Broker

Many first-time buyers go directly to their bank or lender, missing out on the expertise and potential savings a mortgage broker can offer. Brokers have access to a wide range of lenders and can help you find the best rates and terms based on your financial situation and guide you through the application process.

When you choose to work with a broker, you can look forward to the following:

Expert advice and market knowledge
A streamlined application process
A specialist negotiating on your behalf
A higher chance of being approved for the mortgage you want

What Next?

By avoiding the mistakes mentioned above and working with a trusted mortgage broker, you can look forward to a smooth, straightforward home-buying process. So why not start looking at what you can improve today?