Getting on the first rung of the property ladder - Having a reasonably manageable amount of debt and the ability to pay your bills regularly puts you in an excellent position to buy you first home, especially if you have a steady income and have been in regular employment for three years. Of course having good credit doesn't mean you will get 100% of the mortgage value, you will probably need some kind of deposit.
For the first time buyer there are plenty of packages that can smooth out the mortgage roller coaster some lenders can offer mortgages that offer Free valuations of your property and even give you cash back when your mortgage is complete. Owning a home can be a significant first step in attaining financial independence. It helps you eliminate rent payments, build equity, and feel the personal satisfaction of calling a home your own.
Even discounted rates are available, lower payments in these early years can enable you to stabilise your finances and minimise the chances of repossession.
Key Advantages
You can in some cases borrow up to 100% of the mortgage on your property meaning no deposit, however you will get a lower rate of interest if you make a deposit on the property.
Lenders & Borrowers
Lenders will provide mortgages to Professionals, right to buy council tenants, ex pats also self build and self cert are available in some cases.
How much can I borrow with a first time Mortgage
Usually budget your mortgage for a 1/4 of your gross monthly income
Mortgages available to a First Time Buyer?
Most lenders offer a range of fixed and capped rates, discounts and flexible mortgages. Some offer base rate tracker mortgages, and some will give cash backs. Always ask for Professional advice about which mortgage deals are available for first-time buyers, and which are best for you.
Check the mortgage is flexible
A Flexible Mortgage should allow you to...
- Underpay
- Overpay
- Take payment holidays
- Carry no redemption penalties
The three main ways you can pay interest on your mortgage
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Variable rate - where the rate can go up or down
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Fixed rate- where the rate is fixed for a predetermined period
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Capped- where the monthly payments have a maximum for a guaranteed period.
- Variable rate mortgage - interest rate can go either up or down. Thus the interest rate could stay constant and be the same for many months, or it may change a number of times over just a few months. Generally the standard variable rate (SVR) will be the same as the Bank of England Base rate. If you wan to get an idea of your repayment rate then you can monitor that rate as an indicator to what your repayment rate would be. A Base Rate tracker mortgage is basically when the interest charged is linked to the Bank of England Base Rate. The rate will generally be at a set level above the base rate (e.g. 1%) for the term of the mortgage.
- Fixed rate mortgage - you pay a certain level of monthly payments for an agreed period. You can thus budget with increased confidence and are protected against a rise in base rates. The fixed rate period could be up to 25 years, or as low as 6 months [after which you revert to the standard variable rate].
- Capped mortgage - is a combination of fixed and variable mortgage. There is a max rate, over which you will not be charged for a certain period. If the SVR falls below the defined cap, your payable rate follows it downwards.