Mortgages for first time buyers
We understand that the idea of buying your first home can be a little scary, which is why we’re here to help guide you through the process step by step. We help identify how much you can lend, how much your mortgage will cost and how much deposit you will need. All of these key areas are discussed with our advisor who is then able to tailor your mortgage to suit your circumstances.
It’s important to us that you understand the full process of buying your first home; we are here to outline the following areas and answer any questions that you may have, such as:
- How much can I lend?
- How much deposit do I need?
- How much does it cost to buy a house?
- How long will I have my mortgage for?
- What are the different types of mortgages?
- How much will Stamp Duty cost?
- How do I find a solicitor?
- Do I need building and contents insurance? What about life insurance?
- Can I buy a New Build?
- Can I buy a house on a Help to Buy scheme?
We understand that buying your first home may potentially be your biggest financial commitment, which is why we are here to offer expert advice and recommendations in choosing a first time buyer deal that suits you.
Our handy mortgage calculator helps to give you a rough idea on how much your mortgage will cost, however we will be able to give you exact rates and costs based on your personal circumstances and requirements during your free initial consultation with our advisor.
An introduction to mortgages and the different types available:
Essentially there are two main types of mortgages; you have access to fixed rate products or variable rate products. With a fixed rate product you have the option to fix the lenders rate for a number of years to stabilise your monthly payments and allow you to budget. This option will ensure you don’t have the worry of increased monthly payments allowing you to settle into your new home. Some lenders may charge a fee however, should you wish to sell the property or repay the mortgage within the fixed rate term.
In comparison, variable rate products are available such as Tracker Deals, which track the Bank of England base rate plus the lenders percentage rate, Discounted Rates in which the lender offers a discounted standard variable rate, or Capped Rates where the rate is still variable but is capped at a certain level. You can benefit from a variable rate when the rates are low however your monthly payments may increase as the interest rates fluctuate. With variable rates you do not have the certainty of knowing your monthly mortgage outgoings.
It’s important to identify the impact of both products available and what would be more beneficial to you, our advisor is on hand to explain to positives and negatives and offer the most cost effective, future proof solution for you.
How to get started:
Our team at Northern Property Finance are here to help you on your way when it comes to buying your first home. It’s important to start the process with some research on what you feel you can afford and the type of house you are looking to purchase. Taking into account your current income and outgoings will help give you an idea of your budget. Our advisor will give you a good indication on how much you will be able to borrow on a mortgage helping to give you an accurate price range when looking at properties.
Establishing how much deposit you have available is also important in helping you budget for your new home. This can be sourced from savings or maybe a gifted deposit from your parents to help you buy your first property. It is up to you how much deposit you wish to use, the more you use the more affordable your mortgage may be but it’s important to remember additional fees such as stamp duty or solicitor fees.
We would look to obtain an ‘Agreement in Principle’ which would give you an indication of the maximum amount you could lend on a mortgage. This helps provide proof to an estate agent that you are in a position to proceed with a purchase should you see a property you want to make an offer on.
Once you’ve found a house you like and your offer has been accepted, we would look to proceed with a full mortgage application and guide you through the process with your solicitors and estate agent. This process can move fairly quickly if you have all of the information required available such as payslips, bank statements, ID etc. but you are in full control of the whole process. Check out our top tips for further in depth details of what to consider when buying your first home.
Top tips to consider when buying your first home:
- With access to a wide selection of lenders, we are able to offer highly competitive rates on your mortgage alongside lender incentives such as free valuations or cashback. It’s important that you identify a budget and what is affordable for you as there may be additional costs. A lot of first time buyer products incorporate incentives to help you along your way.
- Mortgages are based on what is affordable and how much you can lend is based on how much you earn, if yourself and your partner are both applying for a mortgage together this will essentially increase your lending capacity. The most important thing is making sure it’s affordable for you on a monthly basis alongside any current credit commitments or outgoings.
- Mortgage providers will take into account any credit you currently have, such as a car finance deal or credit card debt, and this can affect the amount you can borrow. Managing your current debt or repaying it can assist with your mortgage and make things more affordable in the long run.
- Obtaining an ‘Agreement in Principle’ is one of the first stages of applying for a mortgage. It’s a good way of being able to find out how much you can borrow from a lender and whether you are credit worthy. This initial agreement will help identify to an estate agent that you are in a position to move forward with a purchase should you see a property you want to buy.
- A full mortgage application will require quite a lot of initial information, such as bank statements and payslips, to assess what you can lend and whether you fit the criteria. Each lender is different but we’re here to recommend the most suitable product for your particular circumstances. An Agreement in Principle would be conducted to identify your initial lending capacity, and if approved a full application could later be submitted. It’s important to know that this process is still subject to full assessment and underwriting, and some lenders may ask for additional information to support your application.
- You will need a deposit when purchasing your first home, a minimum of 5% of the property value e.g. £100,000 property value would require a minimum deposit of £5,000. You can however put as much deposit down as you wish to make your monthly mortgage payments more affordable. A deposit can be derived from savings e.g. ISA’s, Help to Buy ISA’s, general savings accounts or bonds etc, inheritance, or can be a gifted from your parents.
- The interest rate associated with your mortgage will be dependent on the lender and the products they have available. All competitively priced, we will advise on the most appropriate option to make it affordable for you. It’s important to remember that the interest rates can change and that sometimes a good rate does not necessarily mean a good product. We will ensure we answer any questions you have on this.