If you’re single and want to get a mortgage as a first time buyer, then this blog post is for you.
It can be a little scary buying your first home your own. But with the right information and advice, getting a mortgage can be within reach! In this post we’ll give you the tips to help make your journey go smoothly.
1. It’s all about you!
There are some real benefits of having control over getting a mortgage on your own. The most obvious benefit is that you don’t have to wait for someone else’s permission or approval before making decisions about your life. The only person who needs to be convinced about the next step is you!
You can decide what’s really important in your house search without anyone else interfering. For example, you might want to prioritise a garden if having some outdoor space is a big thing on your list for you first home.
Or location might be a bigger factor for your next move. Some people place a lot of emphasis on location to be closer to a city centre and some even live above a shop. If you do want to do this then it’s worth reading our guide.
2. Take a look at your finances – and budget!
Because the mortgage will be based on your income and your expenses only, you need to be able to prove that you can make the mortgage repayments. You might find it difficult getting a mortgage if your credit history is bad, so it’s important to try and improve this.
Make sure you have a way of proving where your money is coming from when trying to get a mortgage as a single person. If you have a job with a monthly salary then payslips will do for this. But if you are self employed you might need to provide more information to a lender to get them comfortable with your mortgage application.
It is important to budget your money in order to make sure you are saving enough for the future. You should make sure you save some of your salary every month to ensure that if something happens that affects your ability to keep your job, you are still able to keep things paid until you can get back into the normal flow of things. Again, because you are on your own for the mortgage you need to be very realistic with how much you actually spend each month.
You should go through your bank statements for the last 2-3 months to pick up on how much you are roughly spending and on what. Some people don’t realise how much they spend on subscriptions each month.
At this point you can ask yourself questions about your outgoings.
Do you really need Netflix, Amazon Prime and Now TV together?
Is it worth paying for a gym membership if you’re only going once a month?
Some expenses are obviously going to be necessary. But for others you might find that you no longer need them.
3. Consider if you want to buy with a friend
Buying a house with someone you know can be the easiest way to get onto the ladder as you’ll have a bigger deposit together. It’s also better for getting the mortgage approved, since mortgage lenders are more likely to approve two incomes combined compared to one (it’s less risky for them). But you obviously need to be comfortable that you and your friend will remain friends – even through difficult times.
It’s not as easy to walk away from a house that you both own compared to renting a place. Most likely you will need to agree on any way forward if one of you wants to leave (but this will depend on how you set up the purchase).
It’s certainly not for everyone, but buying with a friend might be a good option for a single buyer.
4. Speak to a mortgage broker
A mortgage broker will be able to provide you with the best mortgage deals for single buyers. They can find the best products that fit your circumstances.
Mortgage brokers can also answer a lot of nagging questions that you have that you might not have the confidence to ask. It’s best to ask all and any questions to them – even if they sound silly to you. They look at mortgages all day, every day.
Best of all – most mortgage brokers have no fee to pay upfront! They get paid a commission from the bank if a mortgage progresses. This is good if you want some mortgage advice but don’t have the budget to pay for upfront costs at the start.
A mortgage broker is also very useful for people who might have bad credit. They know which lenders are prepared to accept a more challenging credit application. This means you waste less time applying for a mortgage that you’re unlikely to get.
5. Check your job is stable
If you are taking out a mortgage it is important that your job is stable. This is because your wages – and your wages alone – need to cover all of the mortgage payments. Not only should you have a reliable job but it should also be one that pays well enough for you to save some money at the end of each month.
It’s also important to build up some savings to cover the unexpected bills. Some of your essential items in a house will break at the most inconvenient times – like a boiler. You will need to fix them pretty quickly when they happen, and you want to avoid having to borrow money or take out expensive loans to cover these costs.
6. Talk to your friends
So many people don’t talk to their friends about financial matters – but it’s really the fastest way to learn about things!
It’s important to have friends that you can talk to about your housing journey. They will able to share stories about their mistakes in the process and what they regret. They can also provide you with the best advice and most up-to-date information about the way properties get bought these days. The process changes over time.
For example, 20 years ago it was not common to ask about cladding quality or safety for a flat, but after the Grenfell tragedy it is one of the first items that lenders look at before they decide to give you a mortgage.
Lastly, if you have a friend who is going through this housing journey at the same time as you – link up with them. You can help motivate each other when times get tough!
7. Work out the deposit
To get a mortgage on your first home, you need a deposit. This is a sum of money that you have to pay at the beginning of your mortgage. Lenders used to offer mortgages with no deposits (called 100% mortgages) but this was a risky thing to do.
Some borrowers took out a 100% mortgage on a home and later fell behind on the payments. When the property had to be sold to pay back the lender, sometimes the selling price would be lower than the price the borrower bought it for. Lenders don’t want to lose money on giving you a mortgage, so they like you to contribute some to reduce risk – this is why a deposit is needed.
If you try and buy a property with a large deposit amount, this will reduce the mortgage that you need and reduce the risk for the lender. You are likely to get a cheaper interest rate on a mortgage when you put in a higher deposit.
This is why mortgages with a 20% deposit are cheaper than mortgages with a 5% deposit.
Your deposit for the mortgage might be made up of different things. It might be just your savings, or it could include gifts from family members.
Read our full guide to deposit amounts here.
Conclusion
The best way to find the perfect home for you and your family is by doing research now and putting in the time to plan the journey. Think about what’s important to you, such as commute time or cost of living, then create a list of homes that match those needs. Speak to people you know for some tips (and visit our pages!). Consider using a mortgage broker for some advice.
These steps all take some work but it can save you from making easy mistakes in the future! The more information you have at hand before starting this hunt, the better off you’ll be in the end.