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First time buyer mortgages explained

A first time buyer mortgages available to those who are buying a residential proprty for the first time. Arranging your first mortgage can be dificult and daunting, however you can better plan your first mortgage with us.

First time buyer pros and cons

Pros

  • You own a property – you become the property owner for the first time.
  • No need pay rent – paying rent is in away wasting money and coould be used as repayments.
  • Freedom – no more restrictions and rules to follow. You can decide they way you prrefer your home.
  • Excitement - owning a first property means steps on property ladder.

Cons

  • Financial commitments – When gettig a property you are making logest and biggest finance commitment. Your mortgage can last up to 30 years (Uks average mortgage terms is 25 years)
  • Household bills – you wil be responsible for utility contracts and bills which can add up a lot to yor monthly outgoings if not manged corretly. If you have previously rented some of these bills might have been included in your rent but now water, energy and if you own a leasehold property then ground rent and maintenance become your responsibility
  • Mortgage fees – As a first time buyer you should look at extra costs such as valuation fees, broker fees, local authority checks.

First time buyer Frequently asked questions

  • 1. Start budgeting – Lenders will look at your spend versus your income to see if you can afford to have a mortgage.
  • 2. Start saving up for a mortgage deposit – Usually lenders require minimum of 5% deposit for first time buyers. Typically, with higher deposit you can get better mortgage interest rates.
  • 3. Lower monthly expenditure – By managing your monthly expenditure you can understand how much you can afford to pay as your monthly commitment towards a mortgage.
  • 4. Check and build up good credit profile – It is important to have better credit profile. Lenders will look at your profile and decide whether to lend you or not.
  • 5. If possible, ask help from Mum and Dad or relatives – If you don’t have enough deposit you can ask your Mum and Dad or relatives to be your guarantor in order to get a mortgage. If you default and can’t afford to make the payment, your guarantor will be liable.
  • 6. Familiarise yourself with mortgage rates – Look at different types of first time mortagages and lenders. Compare them to see what rates offered by mortgage lenders.
  • 7. Look for a lender – mortgage lenders have different criteria when it comes to lending. We will go through this on the phone with you and offer you a dedicated broker that you can always contact through your application portal

The minimum deposit you require is 5% of the desired property value which is also known as 95% LTV.

LTV also known as loan-to-value which relates to the loan percentage that you need and compared with the value of the property you own are buying. For example; if you are putting up 10% of the house price, your Loan to Value (LTV) will be 90%. The lower loan to value the better mortgage interest deals you are like to secure.

  • 1. Mortgage application fees – also known as mortgage product fee, can range from £0 to thousands of pounds.
  • 2. Property valuation fees – Can be free if offered by the lender.
  • 3. Solicitor and legal fees – They will charge you to carry our local searches and to complete legal paperwork. These can vary on the price of the property but will be around £850 - £2000+ depending on the property price and survey you undertake
  • 4. First time buyer stamp duty- It can be £0 if the property value is below £300,000. If the property value ranges from £300,000 to £500,000 than you’ll have to pay 5% of the property value above £300,000 only.
  • 5. Contents and building insurance – It is mandatory to buy a building insurance for the mortgaged property.

  • Tracker mortgage for first time buyer
  • Discount rate mortgage for first time buyer
  • Capped mortgage for first time buyer
  • Standard variable rate first time buyer mortgage (SVRs)

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