Getting your first mortgage can be a challenge for most First Time Buyers, with so many mortgage lenders offering a wide variety of products; it can be hard to work out which is best or who will agree your First Time Buyer Mortgage.
We’ve put together this short guide, “Mortgages for First Time Buyers” with the aim of giving you a run through of the basics requirements for a First Time Buyers Mortgage.
Calculating the loan size: This will ultimately dictate how much you can afford to spend on your first home. The loan size plus your deposit will give you the total amount you can afford to pay for your first home. The most a mortgage can be for a First Time Buyer is usually the total provable income multiplied by five. A Mortgage Broker can help calculate the exact amount based on your circumstances. Find A Broker In Our Directory
Deposit: This is the amount of money the mortgage lender will require as deposit from the First Time Buyer. Typically this starts at 10%, but can be as little as 5% in some circumstances. Banks can agree a mortgage for First Time Buyers even if the deposit is gifted from a relative or from a personal loan.
What type of rate: This ultimately depends on the borrower and advice should always be sought from a Mortgage Broker or Adviser.
Repayment Method: Most mortgages for First Time Buyers will be required to be placed onto a repayment mortgage; this means your monthly payment is made up from an interest element and a repayment element. A mortgage broker can help calculate this in more detail if you wanted.
Mortgage Term: A typical term for a Mortgage for a First Time Buyer is 30 years, but this is dictated by both affordability and expected retirement age.
Suitable Property Type: Most Lenders will accept both houses and flats as security; however Freehold Flats can be problematic and require a specialist lender. For this reason it’s usually safer for First Time Buyers to try and stay clear.
Employment Status: Mortgages For First Time Buyers are available to many employment types and even for Self Employed Applicants with 1 years trading or Employed applicants with recent employment or job role changes.
Credit History: It’s vital to have a good credit history if you are a First Time Buyer, banks will want to see a proven track record. So make sure your bills and credit commitments are paid on time, this could be the difference between agree and decline! If you’re worried that your credit history isn’t perfect it’s strongly advisable to speak to a Broker first.
Costs: The costs involved in arranging a mortgage for a First Time Buyer vary between banks. Make sure you factor in removal costs, stamp duty if applicable and solicitors fees when calculating the costs involved In buying a home.
Solicitors: You’ll need one if you want to buy a home! But don’t panic too much, your Mortgage Adviser or Broker can advise you of a suitable firm if you prefer. A typical cost when introduced to a Solicitor via a Broker is £500 + Fees.