Getting any kind of mortgage can be stressful enough. Working with a specialist mortgage broker can help you get access to unique deals, as well as expert advice.
A first time buyer is someone who has never owned a residential property before, either in the UK or abroad. Or, you have only owned (or currently own), a commercial property with no living space, such as a pub.
You are NOT considered to be a first timer buyer if:
If you are unsure as to whether you qualify as a first time buyer, get in touch with our team today who will be happy to talk it through with you.
Regardless of whether you are a first time buyer or on your fourth house, the application process for a mortgage is typically the same.
You should start by working out how much money you have, or can afford, for a deposit, as this will inform how much you are able to borrow, and therefore the price of your future home.
Applying for a first time buyer mortgage will usually mean undergoing a credit check and an affordability review. This will involve the lender looking at your annual income, other sources of income, and your outgoings. The credit check will tell them if you are a reliable borrower or if you have missed payments on past accounts, such as credit card bills.
If you choose to opt for a variable rate mortgage – more on this below – or a fixed rate mortgage with a term of less than five years, the lender may ‘stress test’ your finances. This means looking at whether you will be able to keep up your payments if something changes, such as a hike in interest rates. Once they have all this information, they’ll be able to give you a figure for how much you can borrow.
One of the trickiest parts of mortgages is getting to grips with the different kinds that are out there. Each one has benefits and drawbacks, so it’s important you weigh them up before making a decision:
– Fixed rate mortgage – For this kind of mortgage, the interest rate on your mortgage will be fixed for an agreed amount of time. This can be anywhere between two and 15 years but typical fixed rate mortgages will be between two to five years. When the fixed rate ends, you will move over to the bank’s SVR (standard variable rate), which tends to have a higher interest rate – the perfect time to remortgage.
– Standard variable rate mortgage (SVR) – This mortgage is set at the lender’s basic rate of interest, and they don’t come with a reduced rate or discount. Lenders can choose to change the interest rate.
– Tracker mortgage – This type has a variable interest rate that follows an external rate, usually the Bank of England’s base rate. Rather than exactly matching the rate, tracker mortgages will usually be set slightly above or below.
– Discount rate mortgage – Similar to a tracker mortgage, discount rate mortgages track a lender’s SVR, but at a lower level. The rate of discount won’t change, but the interest might, therefore your payments will.
– Offset mortgage – If you have a savings account and a mortgage with the same provider, you may be eligible for an offset mortgage. This type allows you to use savings to offset the interest that gets charged to your mortgage. In plain terms, this means you won’t pay interest on your mortgage to the same value as the amount in your savings account. The more you have in your savings account, the more you will save in interest, and the less your monthly payments will be.
– Capped mortgage – Also linked to your lender’s SVR, but the rate is capped at a set level. Some capped mortgages won’t fall below a set limit.
With a Mortgage Experience adviser on your team, you can sit back, relax, and make yourself a cuppa, safe in the knowledge that we will be doing all the heavy lifting to find you a suitable mortgage with the best rates available. This gives you more time to pack, and well, do the actual physical heavy lifting (should you wish) as you move into and enjoy your new home or the financial benefits of your remortgage.Get In Touch
A first time buyer will typically be asked to put down a minimum deposit of 10% of the property’s purchase price
Buying a house is a big financial commitment, and lenders require a deposit to secure the mortgage and to reassure them that you can afford your new purchase. It is possible to get a 95% mortgage – with a 5% deposit – although these have become less popular in recent years. Get in touch with our team today to see how we can help you secure a 5% deposit mortgage.
If you are in a position to do so, it is better for you to put a bigger deposit down on your first home. Not only will this put you in a better position for favourable mortgage rates – meaning lower monthly payments – it also means you’ll have more equity in your property.
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