Posted on 8th December 2012

The Devil is in the Detail for First Time Buyers

Martin Williamson, Head of Residential Property

For many first-time buyers getting that first foot on the property ladder is the most expensive thing they will ever do. It is also an important rite of passage that most people want to have achieved by the time they reach their mid-thirties. However, it is also one hurdle that many are finding it almost impossible to complete, with the latest figures revealing that the average age of the first-time buyer is now 35, up from 28 a decade ago.

According to a survey by Post Office Mortgages, the average age of the first-time buyer has increased substantially over the past fifty years, rising from just 24 in the early 1960s.

I have already talked about how people can ensure they are ready to make the first rung of the property ladder; however the main hurdle that many people encounter is the problem of how to bridge the gap between the reality of their finances and the cost of getting on the ladder.

It sounds like common sense but many prospective first time buyers may not be doing all they can to ensure that their finances are in the best shape possible before even attempting to buy their first home. There is little point in setting your heart on your dream home before making sure that you will have access to the means to buy it. The importance of sound financial planning has become the subject of a Government initiative called the Money Advice Service, which provides budgeting tips to consumers.

As well as asking you for details of your income, employment status and assets, lenders use information from credit reference agencies to assess how well you have handled credit in the past, and therefore how much of a risk they are taking by lending money to you.

Even if you have not been turned down for credit, it is a good idea to check your file regularly - perhaps once a year - to ensure the information held is correct. Lenders use three agencies (Experian, Equifax and Callcredit) so you need to contact each of them. Under the Data Protection Act, credit reference agencies must provide you with a Statutory Credit Report for a fixed fee of £2. You have the right to dispute inaccurate information on your credit file, and to have errors corrected.

The Money Advice Service at www.moneyadviceservice.org.uk offers a free Money Health Check and Budget Planner. Hints and tips about how to budget can save your both time, money and much frustration when you come to buy your first house. The site also provides no nonsense tips on how to save money, including how to save on phone bills and utilities and how to shop smartly and save. Advice also includes how to deal with debt, improve your credit rating, and prioritise your funds.

In summary, one of the most important things you can do is to access and seek to improve your credit rating. In this tough mortgage market, it is essential that first time buyers are realistic about what they can, and cant, afford. It may be that you should seek to concentrate on the extensive ground work involved in purchasing your first house before even attempting to do so.

By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors www.latimerhinks.co.uk.

Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.