These ‘overlooked’ mistakes can stop you from getting on the property ladder
First-time buyers are being advised to follow this key advice (Image: Getty Images)
First-time buyers are being warned of five common mistakes made when applying for a mortgage that can stop you from getting approved.
With so many parts involved in buying your first home, from deposits and credit checks to legal fees and lender jargon, it’s easy for first-time buyers to make costly errors.
An expert has now shared the most frequent mistakes that people make when stepping on the property ladder, and how to avoid them.
One of the biggest mistakes first-time buyers often make when applying for a mortgage is not overseeing their finances, according James Mulvaney at Clifton Private Finance.
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“One of the most common mistakes we see is buyers focusing purely on the deposit and forgetting about the other costs. Buyers often overlook solicitors’ fees, valuation charges, conveyancing fees, mortgage arrangement fees, removal costs and temporary renting costs (if your house is sold, but your chain experiences a delay),” James says.
“If you don’t budget for them, you might find yourself short of funds right before completion, or forced to dip into emergency savings.
“We generally recommend setting aside around 15 percent of your new home’s value to cover any additional buying costs.
According to Zoopla, the average additional cost when purchasing a home in the UK is around 5-7 percent, but a larger buffer ensures you’re prepared for anything unexpected.”
James also says that first-time buyers don’t check their credit scores early enough.
“Another common mistake is not checking your credit profile early enough. Your credit score directly affects the rates and products available to you,” he says.
“Simple errors, like outdated addresses or missed payments, can be fixed, but only if you catch them early.”
Experts say these are the most common mistakes first-time buyers make(Image: Getty Images)
Going straight to your bank is another error that first-time buyers often make.
“Loyalty is a great marketing tool, but remember, banks want as many customers as possible to use their own products,” he says.
“If your bank advertises a loyalty rate, don’t overlook other lenders that might offer more competitive deals. Even a small difference can add up over time, leading to higher monthly repayments and potentially costing you thousands more over the course of your mortgage term.”
James also advises people not to give up after the first rejection.
“Getting rejected for a mortgage can be disheartening, but it doesn’t necessarily mean you’re ‘unmortgageable’,” he says.
“There are many possible reasons for rejection, from not meeting a lender’s affordability criteria to having a high debt-to-income ratio or a low credit score.
“If this happens, it’s worth speaking to a broker to understand what went wrong and how to improve your chances next time.”
James says that another error is that first-time buyers underestimate or overestimate how difficult the process is.
“First-time buyers tend to fall into two camps, those who underestimate how complex the home-buying process is, and those who find it intimidating because they don’t fully understand the ins and outs,” he says.
“Most are thrown in at the deep end without any guidance, and it can be tough to know where to start. Without prior experience, it’s easy to assume buying a home is similar to renting or making a large purchase, when in reality it’s a legal, financial, and logistical maze.
“First-time buyers also tend to underestimate how many stakeholders are involved, from agents and lenders to solicitors, surveyors, insurers, and inspectors, which explains why many overlook the additional fees.”
There are certain mistakes first-time buyers should avoid(Image: Getty Images)
The expert continues: “Because purchasing a property is financially complex, even small details such as debt-to-income ratios or valuation discrepancies can derail an application.
“Some buyers can also be overconfident, assuming they can simply walk into their bank and secure the best deal. That’s rarely the case today, mainly as there are thousands of mortgage products on the market, and lenders’ criteria vary widely.
“This is where brokers become invaluable, they have the experience to recommend the right direction to take, compare options across multiple lenders, and access deals not available directly to the public.
“They also know when to chase, and who to chase, on your behalf. Whether it’s a solicitor delaying paperwork or a process that could be expedited, having a broker who understands the system keeps things moving smoothly.”
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