From saving a deposit to getting a mortgage – the ultimate guide for single first-time buyers

Credit: Natee Meepian Getting on the property ladder without a partner can be tough – but knowing your numbers could make it easier Between saving a deposit, securing a mortgage, and deciphering real estate jargon in a shifting market, getting your head round your finances is the ultimate key to success. Work out your exact mortgage budget and monthly payments in minutes. Credit: Rawpixel Find out your borrowing power and estimated monthly repayments With mortgage rates and house prices constantly changing, knowing exactly what you can afford is more important than ever. Sign up for the First Time Buyer Guide newsletter Thank you! But being single doesn’t mean you have to give up on your dream of owning your own place. Here are six essential tips for buying a home on your own. Find out how much you could actually borrow Before you start scrolling through Rightmove and picturing yourself in a three-bed semi, work out what a lender might actually let you borrow. When you apply for a mortgage, lenders will look at factors including your salary, regular spending, debts and credit history. As a rough guide, many lenders offer around four to five times a borrower’s annual income, although the amount you can actually borrow will depend on your circumstances. And remember – just because a lender says you can borrow a certain amount doesn’t mean you should. Most read in Money You need to make sure you could comfortably afford the repayments alongside your bills and other living costs. Max out tax-free bonuses If you’re saving for your first home, a Lifetime ISA (LISA) can currently give your deposit a useful boost. Under the current rules, you can use your LISA towards a first home costing up to £450,000, provided you’ve had the account for at least 12 months. You can save up to £4,000 a year and get a 25% Government bonus, meaning you could receive up to £1,000 a year on top of your savings. But there could be changes ahead soon. The Government has been consulting on replacing the LISA with a new, simpler First Time Buyer ISA, designed specifically for people saving to buy their first home. The proposed new account would still offer a Government bonus, but the plans are intended to give savers more flexibility than the current LISA. For now, though, the LISA remains available under the existing rules. You can still open one if you’re eligible, and existing savers can continue paying into theirs. Ready to buy? Calculate your borrowing power and monthly mortgage costs today. Credit: PeopleImages Your spending habits could affect your mortgage It isn’t just your salary that matters. Lenders will look at your income and outgoings when assessing whether you can afford a mortgage. That means regular commitments such as car finance, loans, credit cards and other debts can affect how much you can borrow. Your everyday spending can also be taken into account. So if you’re planning to apply for a mortgage, it’s worth going through your bank statements and getting a proper picture of where your money goes each month. This doesn’t mean you need to stop buying your morning coffee or cancel every subscription you have. But cutting unnecessary spending and paying down expensive debts could improve your financial position before you apply. Check your credit file before you apply Your credit score shows how well you’ve managed your borrowings over the last six years, and lenders use it to calculate how risky it would be to give you money. So it can help you – or hinder you – from getting a mortgage, personal loan, or credit card. Online mortgage broker First Mortgage compliance director David McGrail said it’s important for single first-time buyers to make sure they’ve checked their credit score. If it’s low, then you might struggle getting a loan – especially as banks will know you won’t have anyone else helping you out on your loan repayments. “One of the most common issues we come across is defaults registered by mobile phone or utility companies where the customer has missed a payment and not caught up,” he said. “Settle any defaults and make sure that all the information is correct. Even a £30 default can drastically reduce your mortgage options and increase the interest rate.” Don’t forget the costs hiding beyond your deposit Your deposit isn’t the only chunk of cash you’ll need. You’ll also need to budget for extra upfront costs, which typically average between £2,000 and £5,000 (or roughly 3% to 5% of the property value) for non-deposit expenses. These include: Conveyancing & legal fees: £1,000 – £2,000 Surveys: £400 – £1,000 Mortgage arrangement fees: £0 – £1,500 Moving costs & insurance: £300 – £1,200+ And depending on where you’re buying and how much the property costs, you may have Stamp Duty to pay. In England and Northern Ireland, eligible first-time buyers currently pay no Stamp Duty on the first £300,000 of a property costing up to £500,000. If the property costs between £300,001 and £500,000, you’ll pay 5% on the portion above £300,000. If your property costs more than £500,000, you won’t qualify for the first-time buyer relief and the standard rates apply. The rules are different in Scotland and Wales, so check the relevant rules for where you’re buying. The last thing you want is to save every penny for your deposit and then realise you’ve got nothing left to pay the solicitor. Get a mortgage in principle before you fall in love with a property Once your finances are in shape, getting a mortgage in principle can give you a much clearer idea of your budget. It isn’t a guarantee that you’ll get the mortgage, but it shows how much a lender may be prepared to lend based on the information you’ve provided. It can also make you a more attractive buyer when you’re ready to put in an offer. You can approach a bank yourself or use a mortgage broker. A broker can look at your circumstances and help you understand the mortgage options available from different lenders. Get FREE expert mortgage advice and step onto the property ladder faster Saving for a deposit as a first-time buyer is hard enough, finding the right mortgage shouldn’t be. Mortgage Advice Bureau searches over 90 lenders and thousands of deals to help you secure a home loan tailored to your budget. Speak to a specialist today to see how much you could borrow and get a decision in principle. Book your free mortgage consultation now Mortgage Advice Bureau Limited. Registered Office: Capital House, Pride Place, Derby. DE24 8QR. Registered in England Number: 3368205