First Time Buyer Mortgage Northern Ireland

Supporting First-Time Buyers Onto The Property Ladder

A first time buyer is anyone planning to buy their first home to be used as their primary residence. In recent years it’s been difficult for first time buyers to get onto the property ladder due to rising property prices, stricter lending criteria, and the requirement for larger deposits. Despite these obstacles, first time buyers shouldn't be discouraged. Getting the right knowledge and preparing in advance of your application can be instrumental in obtaining a competitive mortgage offer.

At Tyrone Mortgages in Omagh, we offer expert mortgage advice throughout Northern Ireland and if you're a first time buyer, we can help you understand the various types of mortgage available, find you the best deals, provide practical advice for saving for a deposit, and help pair you with a mortgage broker. Begin your journey onto the property ladder now by getting in touch with the expert team here at Tyrone Mortgages.

What Can I Borrow As A First-Time Buyer?

If you've never bought a home before, you may be wondering whether this will negatively impact your chances of securing funds for your dream home. Afterall, experienced homeowners have a history of paying their mortgage on time and have equity (their current property) they can put on the market. However, the fact that you are a first time buyer actually has very little impact on what lenders can offer you as your loan amount is calculated based on financial circumstances and your credit score, as with any other applicant.

The amount you will receive for your loan will vary and each lender has their own different lending criteria, but you can get a better idea of what you could get by liaising with a mortgage broker, such as the team here at Tyrone Mortgages. We will give you an idea of the costs involved - including the mortgage rates and associated legal fees, and discuss your preferred mortgage term and we can get your mortgage pre-approved in thirty minutes.

Alongside your income, your credit score has the most impact on whether or not your mortgage application will be accepted. Before approaching any lenders to apply for a mortgage, it’s essential to be aware of your credit rating, taking steps to improve it, where needed.

There are a few ways you can go about improving your credit score, and while many of these approaches are fairly simple and easy to do yourself, it can still take some time to build that number up. Some of these methods are:

• Check that your current address appears on all accounts in your name
• Remain within 50% of your available credit for any existing credit agreements
• Ensure you’re on the electoral roll at the correct address
• Pay instalments on any credit agreements on time and in full, where possible
• Some will have a low score due to never having taken credit. A special credit builder credit card can be helpful to show yourself as a responsible borrower

Having a low credit score doesn't mean you won't be eligible for a mortgage, but getting one can be more difficult and lenders may impose higher interest fees and require a larger deposit amount. For more information on how improving your credit score can boost your mortgage opportunities, please don't hesitate to reach out to Tyrone Mortgages now.

Purchasing a Share

As a first-time buyer, you purchase a percentage of the property, typically between 50% and 90% of its total value. This is done with a mortgage, and the share you buy will depend on what you can afford, based on your income and financial situation.

Paying Interest on the Remaining Share

The remaining share of the property that you don’t own is owned by Co-ownership. You will need to pay interest on this portion, but the interest is typically below market rates, making it more affordable than renting a similar property outright.

Staircasing (Increasing Your Ownership)

Over time, you have the option to "staircase," which means buying additional shares in the property when you can afford to. You can staircase in increments, gradually increasing your ownership percentage up to 100%, at which point you will fully own the property and no longer need to pay interest.

Eligibility

Co-ownership schemes are generally available to first-time buyers, people who previously owned a home but can’t afford to buy now, and those with a household income below a certain threshold. The maximum purchase price available via Co-ownership is currently £195,000.

Maintenance and Responsibility

Even though you might not own the entire property, you are still responsible for 100% of the maintenance and repair costs, similar to owning a home outright. You'll also pay a service charge if the property is part of a larger building or complex.

Co-ownership offers several advantages for first-time buyers looking to step onto the property ladder but may not have the financial means to purchase a home outright. This scheme can make homeownership more achievable while providing flexibility and control over future financial decisions.

Lower upfront costs: You are not required to put down a deposit, making the initial purchase more affordable.

Access to homeownership: It enables those who might not otherwise afford a full property to begin owning a portion of a home.

Flexibility: You have the option to increase your ownership over time as your financial situation improves.

Overall, co-ownership can be a valuable stepping stone into homeownership, providing flexibility and reduced financial pressure for first-time buyers looking to secure their place on the property ladder.

Downsides:

While co-ownership offers an affordable route to homeownership, there are some potential drawbacks and practical considerations that buyers should be aware of.

Interest payments: You still have to pay interest on the portion of the property you don’t own, which, combined with your mortgage payments, can become a significant ongoing expense.

Restrictions: Selling the property can come with certain restrictions, and the process of staircasing (increasing your ownership) may involve additional costs such as legal fees and property valuations.

It's important to consider then, that while co-ownership can help first-time buyers enter the housing market with lower upfront costs, it also comes with financial responsibilities and potential limitations that require careful consideration.