How your finances can impact buying your first home
If you’re buying your first home, your financial situation can make the difference between securing your dream home and missing out on stepping onto the property ladder.
1. Your savings
Buying your first home is a significant investment. As outlined in another guide, the average UK house deposit stands at £10,815. This is often something new buyers will pay for from their savings.
2. Your employment
Your employment status plays an important role in mortgage approval and securing favourable interest rates. Lenders prefer borrowers who have steady, full-time employment since it gives them more confidence that lenders can make their payments on schedule.
If you’re self-employed you may have to show more evidence of your income (ideally at least 12 months of payments). Part time workers may need to provide more evidence of additional income required to supplement payments.
3. Your credit history
In addition to your savings and employment, mortgage providers will assess your credit history to understand your financial stability.
According to credit agency Equifax, they may look into:
- Existing debt and repayment patterns.
- History of missed payments on bills and outstanding debts.
- If you have any CCJs (County Court Judgements) on your record.
- If you’re linked financially to anyone else and their impact on your credit rating.
A ‘bad credit history’ can impact your mortgage approval and influence interest rates. However, some lenders may consider applications on an individual basis, so getting a first-time buyer mortgage with bad credit isn't impossible.
If you are worried about having a poor or bad credit, the Money Helper suggests the following actions to improve your credit rating:
- Ensure you’re registered on the electoral roll.
- Correct any mistakes on your credit file. You can find detailed instructions on how to do this in this guide from Uswitch.
- Pay off your debts as much as possible.
- Make sure to pay your bills on time.
- Keep your credit utilisation low.
4. A seller’s approval
In some cases, whether the seller of the property is a new build developer or the property is on the open market, they may want to know about your financial circumstances to establish your ability to buy.
While a seller’s assessment of your finances may not be as detailed as that of a mortgage provider, they may still be interested in things like your employment status and your ability to afford the initial deposit.
At Tilia Homes, we ask potential customers to be qualified by The New Homes Group. This ensures that we have a clear understanding of your financial situation and can offered tailored guidance on finding the right new build home for you. You have the option to proceed with The New Homes Group or use a mortgage provider of your choice.
5. Your financial stability
Before you start searching for a new home, it’s crucial to ensure that you are financially stable.
Our experienced sales teams are here to answer any questions you may have regarding your finances when buying a new build property. They can also discuss our available buying schemes like shared ownership, as well as handle any enquiries about our quality new build developments.
To learn more about the support available at Tilia Homes, you can get in touch or explore our other first-time buyer guides here.