First Time Buyer in 2010

If you are planning the purchase of your first home this year then you need to consider some key areas.

The Right Deposit – You need the best deposit you can arrange to get the best deal.

The minimum deposit is likely to remain at 10% for the rest of 2010 and the 100% mortgage is not likely to be offered by major lenders for sometime.

The bigger your deposit the better the interest rate and overall deal is going to be. 15%, 25% and 40% are threshold levels beyond which the rates get better so a 22% deposit is treated as a 15% deposit so try go the extra mile and save to the next threshold.

Your credit score is still important and just having 10% deposit is no guarantee of a mortgage if your score isn’t good enough.

Use a Broker – If you are uncertain it may pay you to consult a mortgage broker.

Brokers should survey the whole market and match your circumstances to an appropriate mortgage deal.

Brokers should ensure you don’t forget how costly a mortgage can be.

Costs of Property Purchase. – Stamp duty is now back to 1% on prices £125,000 – £250,000, 3% if the purchase price is above that and 4% for those paying over £500,000.

Legal fees, survey costs and arrangement fees all mount up. It is easier to forget a cost than to over budget so have some contingency available.

Look at the whole package of costs as arrangement fees now or after any initial ‘special offer’ can bump up the effective interest rate and take a lump of savings to sort.

Other Considerations

Not every bank will want to lend to you. Do not take it personally it is just business to them. If you are rejected try understand the reasons and where possible put them right for the next application. If it is the property value that is rejected may be someone is trying to tell you something.

Interest rates may vary, probably upwards at some stage this year and the longer you are fixed for the greater vision you will have about your outgoings.

The trend on rented property costs is not likely to be upward this year but supply and demand area by area may influence your buy or rent decision. In any case think things through as it is your home you are considering buying.