Real Estate Expert Explains 5 Things You Must Do Before Buying Your First Home

Latest figures from the UK House Price Index (HPI) show that house prices in England have risen 9.9% over the year to March, taking the median selling price to £297,524 – but will they continue to rise?

Rising property prices and interest rates, along with the cost of living crisis, have made it more expensive to get a mortgage.

The latest figures from the UK House Price Index (HPI) show that house prices in England have risen by 9.9% over the year to March, taking the median selling price to £297,524.

However, this is a slowdown compared to February when prices shot up 11%.

Property prices first started to rise during the pandemic when Chancellor Rishi Sunak announced a temporary stamp duty cut to revitalize the property sector after relocations were banned during the lockdown.

But property experts say the market is slowly cooling – with prices rising less – after the Bank of England hiked interest rates to 1% earlier this month.

The cost of living crisis and rising inflation, now at 9%, are also putting even more pressure on our wallets, meaning more people can’t afford to climb the ladder – slowing demand.

But if you’re able to buy, here are five things you need to know, compiled by personal finance site Nerd Wallet.

Have you just bought your first home? Share your story: mirror.money.saving@mirror.co.uk

Tim Leonard, personal finance expert at NerdWallet, said: “What has already been a challenging task for many, getting a mortgage as a first-time buyer is likely to become even more difficult.

“Given the staggering rate at which house prices are rising, many are having to save an even larger down payment for homes while the rising cost of living increases their spending elsewhere.

“It’s a difficult situation, but there may be some steps that can be taken to help people fulfill their homeownership dreams, even in the current financial climate.”

1. Check your credit history

Your credit rating will determine which lenders will grant you a mortgage – so it’s important to check yours and make sure it meets the requirements.

A strong credit score indicates a good track record of paying off debts on time, and this means you’re likely to be offered the best deals.

If you don’t have a good score, you may not be offered the best interest rates or may even be denied a mortgage altogether.

However, all hope is not lost as there are specialized lenders that deal with bad credit scores.

You can check your credit score for free with Equifax and Experian.

2. Find out what you can afford

Before you start looking for your first home, you should add up the numbers and calculate how much you could spend on a house.

Most lenders will let you borrow about 4.5 times your current salary as a rough guide. The bigger your deposit, the less you have to borrow.

But in addition to the security deposit, you also need to factor in legal fees, relocation costs, and appraisal costs in the mortgage process.

Also, you should give some thought to how much you’ll be spending on other bills each month after you finally move into your dream home.

With an online mortgage calculator, you can easily check what you can really afford.

Most will usually ask you questions about your income, expenses, and how much you deposit, among other things.

3. Set a budget and savings goals

Once you know what you can afford to borrow and the little extra for the cost of getting a mortgage and moving, it helps to set a realistic budget.

Budgeting can also help you figure out where to adjust your spending so you can save more money.

Depending on which bank you use, some of their mobile apps may have built-in money saving tools that can help you manage your money.

It might help to do some research and find a separate budgeting tool that works best for you.

4. Increase your savings

There are many programs for first-time buyers to help you get up the ladder, so make sure you make the most of it.

For example, there is the Lifetime ISA (LISA) account that gives you a free 25% bonus from the government every tax year.

If you have a LISA you can save up to £4,000 every year – that means you get £1,000 free to invest in your first home.

Here are more examples of first-time buyer programs.

5. Compare mortgages before you apply for them

Mortgage products all have to meet different requirements and affordability criteria.

You should check and compare this online for free so that you get the best and cheapest deal for you.

This could also save you time in the long run by not applying for mortgages you don’t qualify for.

It’s important to verify that you meet the affordability criteria for a mortgage, as lenders do the same by examining your income and spending habits.

This way, they can ensure that you can keep up with mortgage repayments in the future.