First Time Buyer Mortgages explained - Apply for a First Time Buyer Mortgage

First time buyer mortgages are becoming less accessible for many due to rising house prices and the current state of the economy. Although house prices are slowly falling, first time buyers are finding the prospect of securing a mortgage a daunting experience. One of the main concerns linked to first time buyer mortgages is the required deposit. With the current financial market conditions, lenders are typically asking for a deposit of around 20%, although the figure may vary depending on the lender.

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Apply for a First Time Buyer Mortgage

This is a free mortgage comparison service from Property Advice Blog. We use Secure Server Technology for all our online form applications so your personal data is absolutely safe with us!

For many people the idea of owning their own home is beyond reach as the deposit is unattainable. However there are a variety of options on the market which can help potential first time buyers to find a mortgage without getting into debt. Some options include buying a property with friends, guarantor mortgages, government schemes and buy to let mortgages. By following an alternative option those wishing to get on the property ladder may find a mortgage which is both affordable and realistic.

First Time Buyer Mortgages – Fees

In addition to a deposit, first time buyer mortgages often include a higher lending charge. This tariff which was previously known as the mortgage indemnity guarantee or MIG, is a fee which the lender charges if the loan is greater than a given percentage of the property’s value. Lenders often use this fee to buy an insurance policy which protects them if the borrower defaults and stops paying the mortgage. Some lenders may ask for this fee up front at the start of the mortgage or add it to the ongoing loan.

Additional costs First Time Buyers need to consider:

• Stamp duty
• Deposit
• Survey’s fees
• Conveyancing fees
• Mortgage lenders arrangement fees
• Land registry fees
• The cost of moving in

Will I qualify for a Mortgage?

In order to buy a property you will need to be at least 18 years old, you will need a deposit of at least 10% and you will need proof of income, so that the lender can see that you can afford repayments. Your income will affect how much the lender is willing to let you borrow. Similarly your credit history will affect the quote you receive, the better your credit history the more likely you are to get a mortgage at the best possible rate. Similarly raising the most amount you can for a deposit will secure you a better mortgage deal as it makes you lower risk.

What should I consider before taking out my First Mortgage?

It is extremely important to look at your finances in detail before applying for your first mortgage, you should have an accurate idea of how much you earn and how much you spend each month. Be prepared for different eventualities, although you can’t prepare for every situation you should have an idea of what you would do if you lost your job and how many months you could pay from savings before running into financial trouble. When deciding how to repay your mortgage you should choose monthly repayments that you can afford, the higher the repayments the quicker you will pay off your debt which will save you money in interest, however overstretching yourself and failing to make payments could put your house at risk: so it is important to calculate what you can afford.

What type of Mortgage should I opt for?

First time buyers are often attracted to discount mortgages because of the attractive introductory offers, this is a good way of reducing your outgoings in the first few years of house ownership which may be essential to help you afford to set up your household. However once the introductory period is over you should be aware of what the new rate of interest will be, so pay close attention to the lender’s standard variable rate. A first-time buyer might want to consider instead a fixed rate mortgage that offers security and the ability to plan financial outgoings. This is particularly important if you are on a strict budget. Similarly whilst mortgage deals that don’t have an arrangement fee may be attractive you are likely to get better rates if you are willing to pay a higher fee. The next thing to consider is your mortgage term, this is the amount of time you agree to pay your mortgage back in. The longer the term the smaller your monthly outgoings but the larger size of the overall amount you will pay. When deciding a mortgage term choose an amount which is affordable for you.

If you want to find a mortgage and get on the property ladder for the first time you may find that you need to compromise or follow an alternative method. By speaking to an independent mortgage adviser about first time buyer mortgages you’ll discover which mortgage solution can work for you, without getting into unnecessary debt.

It is a difficult time to be a first-time buyer, especially when considering the low lending rates meaning it is more and more difficult to secure a mortgage. By considering a few things before you apply you can increase the chances of obtaining a mortgage and ensure you can afford monthly repayments for your next property.

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