Compare First Time Buyer Mortgages

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Compare First Time Buyer Mortgages

If you are hoping to purchase a house or flat for the first time .You will probably have a variety of questions about how the buying process works. The good news is that if you are a first time buyer, you should be able to find plenty of excellent deals that will help you to take your first step on to the housing ladder.

In many cases, first time buyers can opt for either a variable rate mortgage or a fixed-rate mortgage. Which is a decision that will need to be made based largely upon the amount of financial security you are looking to retain.

If you are looking to explore the options available to you and want to equip yourself with as much knowledge as possible before you start to compare first time buyer mortgages Here are some of our top considerations, tips and tricks for getting started.

What is a variable rate mortgage

With a variable mortgage, the interest you will be required to pay on the loan can increase or decrease depending on the base rate set by the Bank of England. Often monthly repayments are slightly cheaper than with fixed rate mortgages but if the interest rate increases, your repayments will also rise. If lower initial monthly repayments suits your circumstances and it is likely that interest rates will remain low throughout the course of your agreed mortgage term, it could be worth taking the risk and opting for a variable rate mortgage.

What is a fixed rate mortgage?

If you want to guarantee that your interest rate will remain the same regardless as to what happens with the Bank of England’s base rate. A fixed-rate mortgage is likely to suit your needs and circumstances. Many first time buyers like the level of financial security that fixed payments provide even though the monthly repayments could be slightly more expensive than they would otherwise be with a variable rate mortgage.

How long should my mortgage be fixed for?

First time buyers are usually offered several different fixed term periods when opting for a fixed-rate mortgage .With two years being the minimum and 10 years being the maximum. Each option will have its own advantages and disadvantages.

If you were to opt for a two or three year fixed-rate mortgage, you are likely to be able to secure a competitively priced deal that will come complete with lower interest rates. Conversely, although five or 10 year fixed rate mortgages are often initially more expensive, they have the potential to deliver additional financial security in the future.

When your fixed-rate mortgage comes to an end, the term of your loan will be switched to the standard variable rate (SVR) offered by your lender. As this is typically significantly more expensive, you may want to remortgage your home as quickly as possible.

’Im a first time buyer, how much can I borrow?
When applying for a mortgage, your chosen lender will analyse your financial situation to determine how much you can afford to borrow. In addition to looking at your income, your living costs and monthly outgoings will also be taken into consideration. It is unusual to be offered more than five times your annual income.
What information do I need when I compare first time buyer mortgages?

There are a variety of ways to compare first time buyer mortgages. But the process can quickly become overwhelming if you aren’t certain of the position you are in. The most attractive mortgages for first time buyers generally have no fees and the lowest possible interest rates. When shopping around for your first mortgage, there are a few questions you will need to ask yourself, including:

– How much do I want to borrow?
– Do I want a variable rate mortgage or a fixed rate mortgage?
– How long do I want to make mortgage repayments for?

If you aren’t sure how much you could borrow, you can start an Agreement in Principle (AiP) with a potential lender which won’t affect your credit score.

It is also important to note that some of the best mortgage deals are dependent on something called loan-to-value (LTV). If the mortgage you are interested in has a LTV of 75%, you will need to be in a position to put down a 25% deposit.

Is a first time buyer, how much of a deposit do I need to save?

To obtain a mortgage, you will generally need a deposit equivalent to 5% of the cost of the property you want to purchase. So, if you want to purchase a £150,000 property and the mortgage you are looking at has a 95% LTV. You would need to put down a £7,500 deposit. Your mortgage would then cover the £142,500 needed to make the purchase.

If you want to have access to the best first time buyer mortgage deals. You will need to save a more sizeable deposit to reduce your LTV. Buyers who can put more money into the pot are viewed by lenders as less risky borrowers, which means they will be more willing to offer their very best deals.

Approaching the property buying process with a deposit will always put you in a more favourable position but it might be possible to obtain a 100% mortgage.

Conducting a comprehensive first time buyer mortgages comparison

When looking for first time buyer mortgages comparison tools are likely to be one of the first things you turn to online. Although they are designed to simplify the process, they can sometimes be confusing which is why it is important to spend time researching the house buying process in advance.

Although it might be possible to secure a 100% or a 95% mortgage. As a first time buyer you will be a better position if you can save a 15% deposit. This will ensure that you are eligible for the maximum number of mortgages when you utilise first time buyer mortgages comparison tools.

It will be in your interests to avoid mortgages that come with high fees. These mortgages usually offer temptingly low monthly repayments but as they are often for relatively short terms. You will end up needing to remortgage every few years and end up paying a lot of money in fees.