The excitement of buying your own property for the first time and the feeling of independence and owning your very own home. Unless you are one of the very fortunate few, you will need to look at a first-time buyer mortgage.
First-time buyers have been steadily increasing since 2008, part thanks to some exciting Government-backed schemes that include shared ownership and help to buy loans. But if you are looking for a standard first-time buyer mortgage there are a number of things that you need to consider.
The initial important things to consider are how much will you be able to borrow and how much deposit will you need. There is little point in searching for the house of your dreams if your budget will not allow it, so have an idea of how much you can borrow before setting out.
Historically, mortgages were calculated from a multiplier of earnings, often between 2 – 3 times annual salary. This model has shifted somewhat towards affordability, with a mortgage lender looking now at affordability – that is income and expenditure and what an individual can afford monthly. Again, each case is taken on its own merit so expert advice is needed before making mortgage applications without care and attention.
Needless to say, the higher the deposit available, the greater the chance of securing a first-time buyer mortgage. Additionally, you will be borrowing less so payments will be more manageable. Most lenders will allow up to 95% of the property price but you will have a wider choice should you have a 10% deposit or above. If you can raise significantly more than this you will be in a very strong position to qualify for a low-interest rate.
First-Time Buyer Mortgages are often fixed rates, allowing the borrower to firmly fix monthly budgets and plan cash flow on a monthly basis. Most lenders will fix rates for up to 3 years, some even longer. The interest on fixed-rate mortgages tends to be slightly higher but the advantages of being immune to interest rate fluctuations hold a lot of comfort for many people.
Variable rates follow interest rate fluctuations, so if the Bank of England increases its base interest rate then the variable rate mortgage payment will rise accordingly.
Choosing the right mortgage is potentially a tricky exercise, especially if you do not have vast experience in financial dealings. Speaking to a professional advisor will significantly help you save time, money and heartache and can also secure your mortgage far more quickly than approaching a number of lenders directly and going through the process of qualification and application.
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