A guide to getting a first time buyer mortgage

The truth is that no matter where you end up living, there is nothing more exciting that buying your own home. But the process can be as daunting as it is exciting, and in particular you may be confused about getting a first time buyer mortgage.

New terminology

Firstly, there are a number of new terms to get to grips with. You may come across the following terms for the first time:

• loan to value ratio (LTV) – this means the ratio of the amount that you need to borrow compared to the total value of the property. You may find that the better ratio you have (ie. the less you have to borrow compared to the total value), the more attractive the  deals may be;
• fixed and variable rates. As if interest calculations were not difficult enough, which of these may you choose? Fixed rates (where you’ll make a set repayment amount for a period of time) may typically be available to people who want the security and certainty of knowing exactly how much their repayments will be. Variable rates on the other hand may change according to the bank’s rate changes, which may make it difficult to budget;
• repayment and interest only deals. With a repayment mortgage, you are repaying both the capital amount borrowed, plus interest. For an interest only deal, you repay the interest amount only. However, this does not mean that you do not have to repay the capital amount of the loan! It simply means that you have until the end of the first time buyer mortgage’s term to come up with the capital amount.

New commitments

As all the warnings on the bottom of first time buyer mortgage marketing materials point out, failure to keep up your repayments may result in repossession. This means that the bank or building society who has given you a mortgage could take possession of your flat or house and sell it to pay off the amount that is outstanding on your loan if you default on your loan repayments.

The prospect of this happening is why you may wish to pay close attention to whether your new mortgage is affordable before you sign on the dotted line and set your heart on a new house.  Accordingly, you may wish to check and double check whether you will be able to pay the mortgage when everyday living expenses like utilities bills and home and contents insurance are taken into account.

When deciding whether or not they will give you a first time buyer mortgage, lenders may also take your credit rating into account. This is where checking it yourself beforehand may be a worthwhile exercise. Mistakes in these reports are not unheard of, so it may be worth double checking that the credit referencing agency has the correct facts about you. Visit Experian (www.experian.co.uk) or Equifax (www.equifax.co.uk) for more information.

The first time buyer mortgage

If you’re looking for a first time buyer mortgage, then you’re probably going into things with a mixture of excitement and trepidation.

Buying your first property is a big step and it’s hugely important to get it right!

Here are a few, hopefully useful, tips to think about.

Affordability

It’s sometimes tempting to stretch yourself as far as possible when going for a property – and even experienced house buyers sometimes do that.

However, it’s worth keeping in mind that buying a property also involves a lot of one-off additional expenditure that isn’t included on the estate agent’s ticket price including:

• legal and survey fees;
• property and contents insurance;
• repair, redecoration and refurbishment costs;
• removers’ bills;
• various utility connections;
• etc!

Remember also that the monthly mortgage payment won’t be your only regular outgoing. It might also be prudent to allow something each month for unexpected bills and minor disasters that hit everyone from time to time.

So, it might be sensible to think about a property that isn’t right at the very top limit of your financial reach.

Looking for a first time buyer mortgage

Although recent years have been economically difficult, many mortgage providers are still very keen to attract new first-time buyer business.

So, there’s typically no need to grasp frantically at the first offer you get – you may be able to shop around the find a suitable deal.

Period versus modern properties

This is always a question of personal taste but anyone that’s owned a period property will tell you that the ongoing maintenance and repair costs may be very significantly higher than with a relatively modern build.

If you’re targeting properties built before, say, the Second World War, that may be something to keep in mind.

Gardens and land

You may have some sort of rural idyll vision and set out with the very best of intentions relating to your garden. That may tempt you to look for properties that have a substantial plot with them.

Remember though, that if you’re working full time, actually keeping your garden or land in good tidy order may be far more difficult than you imagined.

So, before taking on a bigger first time buyer mortgage to pay for a bigger garden, make sure that you’ll be able to handle it.

Watch your boundaries

In theory your solicitor should protect your interests here but even so, pay particular attention to what the deeds are saying relating to your boundaries and rights of access for you and others.

Make sure you ask your solicitor for a plain-English written explanation that does not involve legalise.

The one thing you won’t want after final completion, is an expensive squabble with your neighbours – something that if unresolved may even negatively affect the value of your property.

Ask advice

Most first time buyer mortgage providers will be only too happy to offer further tips and guidance. So, good luck and enjoy the property hunt!

First time buyer mortgage for the first time home buyer

Buying your first home is going to perhaps be your most important purchase to date. A great many people may find the process of finding the right first time buyer mortgage a little daunting. Yet, it needn’t be as stressful or confusing as it might seem.

Getting your mortgage is all about knowing your product options. These range from the fixed mortgage to the tracker mortgage. The difference between the two is that one offers set interest rates while the other offers you a fluctuating interest rate.

Perhaps the capped mortgage option is best as it enables you to fix your interest rate so that it won’t rise above a certain level over a set period of time. Perhaps you want or are able to pay off more each month then you might go for the flexible mortgage option would suit you.

You may also need to have a healthy percentage to put down as part of your deposit. The higher the percentage you have to put down, the more likely you are to get approved for the first time buyer mortgage you desire.

It may be a worthwhile idea to think about all the extra costs you will incur on top of your monthly mortgage payment such as utilities and council tax, not to mention food and living expenses. So if you are not sure what you can afford to pay speak to your mortgage specialist who will be happy to sit down with you and advise you.

Remember that your satisfaction during the whole transaction process is the key to your enjoyment of your home. The first time buyer mortgage finding experience should make you feel glad that you took the plunge and put your money in something tangible such as a house.

It could also be a good idea to discuss repayment periods with them too. Generally you would take out a mortgage over a period of 20 or 25years, but this can vary. Keep in mind that the bulk of these years all you are doing is paying off the interest and even a little extra payment each month can affect and reduce the total repayment period quite noticeably, in your favour.

As a first time buyer applying for a first time buyer mortgage, you need to meet with a mortgage specialist together with the details of the property you intend buying, your personal identification, tax records as well as proof of income, bank statements and proof of any assets you may own.