First Time Buyer Mortgages
Buying your first home is a big commitment, and choosing the right mortgage is a big decision. Do you want the security of a fixed interest rate or can you afford to track the base rate? Below you'll find advice to help you choose the best mortgage deal for you.
About First Time Buyer Mortgages
As a first time homebuyer, one of the most important considerations you will need to make is what mortgage to use. This is even more important than choosing your home, as your mortgage is a long-term financial agreement that will be a part of your life for as long as the next thirty years. You need to know that you can afford the monthly payments. You also need to know all of the ins and outs of first time buyer mortgages.
What Is a Mortgage?
A mortgage is a loan used to buy a property, the mortgage market is very competitive and you'll find mortgage rates are considabley lower than other types of loan but this is mainly down to the fact that the lender will secure the loan against the property, meaning should you fail to repay the mortgage you home may be repossessed.
Things To Consider
Being a first time buyer chances are you're on a tight budget so choosing the right mortgage is vital. By opting for a fixed rate mortgage you run the risk of paying over the odds if interest rates fall but you will find it a lot easier to budget for as the repayments will remain constant for the length of the fixed rate. Alternatively choosing a mortgage that follows the Bank of England's base rate or the lenders SVR, such as a tracker or discount mortgages means you may save money as the interest rate reflects the countries economic standing, however this type of mortgage is difficult to budget for and could see repayments differ by hundreds of pounds as interest rates change. You'll also find that the larger the deposit you have the better the interest rate you can expect.
What To Look Out For
First time buyers represent more of a risk to lenders, mainly down to the limited credit history available but there are a number of factors, consquently lenders will demand a higher rate of interest and arrangement fees. The other trap to avoid if possible is the lenders 'tie-in', where by a lender will attempt to tie you in to keeping the mortgage with them by charging large early settlement charges for a lengthy time.