Jonathan Scullion: Are you taking your first step on to the property ladder in 2021?
AS part of last month's Budget, mortgages have become more accessible and affordable for first-time buyers in Northern Ireland.
The mortgage guarantee scheme, which runs until December 2022, is available to current home-owners and first-time buyers purchasing properties up the value of £600,000, and provides a guarantee to lenders who offer mortgages to people with a deposit of just 5 per cent.
This is obviously a welcome move, particularly for first-time buyers, who otherwise might be struggling to get their first step onto the property ladder.
To be eligible for the scheme you must meet the criteria and consider a number of important factors, including:
- Having a deposit equivalent to between 5 per cent and 9 per cent of the property’s purchase price. That means you’ll have a mortgage loan to value (LTV) between 91 per cent and 95 per cent. However, it is important to remember that whilst the scheme offers the lower 5 per cent deposit, if you can afford to put down a larger deposit it is still recommended as the rates are generally higher if you’ve got less than a 10 per cent deposit.
You can only apply for a capital repayment mortgage and won’t be able to apply for an interest-only mortgage. If this is your first time buying a property, it’s vital you consider a number of pointers before making such a big financial commitment, including:
- Affordability. Work out your current monthly outgoings and budget what you can realistically afford for the increased living costs associated with owning a house. Seek advice from a reputable mortgage advisor who will be able to provide you with all the information as well as help you work out how much you can borrow by looking at your income and outgoings.
- Work out the cost of buying. When purchasing for the first time, buyers might not be aware of the associated costs, so it is vital to factor them in to your budget. These costs include, mortgage arrangement fee, valuation fee, legal fees and surveys.
The next step on the ladder is to secure a mortgage. Work with your mortgage advisor to find the best option for you and secure a mortgage in principle. Not only will this give you a better idea of what figure you are able to borrow, but it could give a potential vendor increased confidence in any offer you might make on a property.
Once you agree to purchase a property you will have to formally apply for the mortgage. After submitting the mortgage application, your solicitor will look after the legal transfer of the property. As this stage, your solicitor will:
- Act as an intermediary between you, the mortgage lender and the vendor, ensuring all parties’ queries are responded to
- Review the contractual information
- Liaise with the Land Registry
- Confirm a completion date
- Transfer the money for the sale
Whilst purchasing your first home can be a stressful time, it is also an exciting stage in your life journey and should be enjoyable so ensure you engage with reputable legal and financial professionals whose job it is to help make the process as stress-free as possible for you.
Jonathan Scullion (firstname.lastname@example.org) is a solicitor at McKees (www.mckees-law.com) specialising in conveyancing and property related matters