First Time Buyer Mortgage Advice
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Buying a house is the biggest investment you're ever likely to make, but for a first time buyer this can be a rather stressful time. It's important to get all the information on mortgages before you start which is why we have created this short guide to guide you through the process.
Your finances
Think about how much you can realistically afford to pay every month. Use the YOUR MOVE budget calculator to get a rough idea and then talk the figures through with a Financial Consultant.
How much can you borrow?
The majority of mortgage lenders will calculate how much they will lend based upon an assessment of affordability where they analyse your income and outgoings. Our How Much Can I borrow calculator will give an indication of what these amounts might be but you will need to discuss your individual circumstances with a mortgage adviser to obtain an accurate figure. Book an appointment to discuss how much you can borrow.
Deposits
Lenders will normally only advance you a certain amount of a property's value. Currently the most that a lender is likely to lend as a mortgage is 90% of the value or purchase price. This means that you will need to provide the balance of the value of the property, this is your "deposit". Generally speaking, banks and building socities will offer a wider range of products with potentially more competitive interest rates for borrowers with larger deposits.
Special deals
Mortgage lenders sometimes offer special mortgage products to first time buyers which are usually short term introductory benefits. These benefits might be a discounted rate, a fixed rate, or a capped rate for a certain number of months or years, known as a 'tie-in period'. Mortgage lenders will want you to stay with them for as long as possible and therefore many mortgages may contain an 'early repayment charge'. This means that if you want to pay off your mortgage early, or move it to another mortgage lender, you will have to pay a fee.
Basically, the longer you borrow the money for, the more interest you'll pay over the term of the mortgage. However, the longer you take to pay back the loan, the less you have to pay each month.
Bank of Mum and Dad
If you are lucky your parents may help you with your deposit and also it's possible for parents to guarantee part of a mortgage.
Joint mortgages
Another way to get onto the property ladder is to buy a property with a friend. This needs very careful consideration and specialist legal advice before entering into. For example it would be a good idea to draw up a deed of trust with a power of sale. This means that one person can't block the sale of the property if you fall out or the other person disappears without a trace.
Shared Equity
You buy a given share in a property, typically 75%, with the aid of a mortgage whilst a third party (usually a developer or housing association) owns the remaining share. You do not pay rent on the remaining share, instead when the property is eventually sold the developer or housing association will be entitled to receive their share of the sale proceeds.
Shared ownership
You may be eligible for one of the many shared ownership schemes available across the country. Often with these schemes a Housing Association will sell a share of the property (between 25% and 75% of its value) and the purchaser will pay the Housing Association rent on the rest.
How we can help
If you are a first time buyer looking for your first mortgage we understand you are going to have questions which need answering. Personal advice means you can ask as many questions as you like through the mortgage process as you'll always have a single point of contact.
We'll speak to you in plain English, not jargon.
Contact YOUR MOVE today for mortgage advice
For mortgage advice our initial consultation is free, however we do charge a fee for administering your mortgage application. The precise amount will depend upon your circumstances however we estimate that it will be £399.
