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If you’re buying for the first time, the main things you’ll want to know are:
Good question. One that can’t really be answered in a paragraph of an article. If you’ve not missed any payments on anything and your income is high enough then you should qualify with most lenders, but each application is judged on individual merit.
It can come down to employment status, affordability, age, credit score, property type, and a whole host of different things.
Credit scoring systems these days are so complex, it’s impossible to work out exactly what score they’ll give.
The good news is, that as every lender is different, and if you’ve been declined once it doesn’t mean you can’t get a mortgage with another lender. Some lenders are surprisingly flexible, some don’t even credit score.
They are all constantly changing their scoring systems, at times raising the bar making it harder to qualify, other times lowering it making it easier – usually depending on how much money they have to lend at the time. If you’re struggling, I’d suggest you get in touch and an advisor can see if there’s anything that can be done based on the latest market criteria.
This really depends on the income and commitments you’ll have when you’ve got the new mortgage. General rule of thumb is about 4x your salary, but can be up to 5x depending on credit profile.
‘Salary’ is a fluid concept in and of itself however, as every lender takes different incomes into account. Some take state benefits, overtime, shift allowance, bonuses, holiday pay, dividends, investment income, retirement income, overseas income… and others don’t.
Some take 3x joint salaries, some can stretch to 5x in the right circumstances. Again, your best bet is to make an enquiry so an advisor can calculate your borrowing limits. For more info have a read of our mortgage advice pages.
A common issue for first time buyers is a lack of a decent sized deposit. At the moment, the minimum is 5% across the board, but these are scarce and have very strict criteria to meet if you are to obtain one, not to mention coming with a much higher rate than 10 or 15% deposit deals.
With the introduction of the new Help to Buy 2 scheme however, buying any property with just 5% deposit is now much easier.
Specialist lenders can often help you if you have a minimal amount to put down as deposit, and with the right advice you can save hundreds on your mortgage by getting the rate right.
Using a whole of market, independent mortgage broker, can help ensure you get the best deal available.
NOTE: 100% mortgages don’t really exist anymore, however through some specialist lenders it is possible to borrow the 5% deposit required on an unsecured loan, provided it is affordable to do so.
If you are looking to buy and have no deposit, but think you have the income to sustain a loan and a mortgage, please get in touch.
This will be determined by the amount you borrow, the rate, any fees added onto the product, and the term.
Historically, mortgages were lent over 25 years to start with, nowadays things are much more flexible, and you can set the term to whatever suits you. For instance if borrowing £100,000 costs £1,000 over 15 years, and you have a budget for £600, then extending the term to 30 years may help.
To find out what rate you’re likely to be on, play around with the online mortgage search engine and mortgage calculator to get a better idea, or give us a call and have an advisor calculate this to the penny.
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These mortgages are designed to offer some help with the cost of getting your first mortgage. They tend to have either a slightly lower rate or are cheaper on fees, for mortgages with smaller deposits (10-20%).
Don’t let anybody fool you though, these aren’t always world-beating deals and often make little impact when you’re searching through the whole market. Remember, first time buyers are usually also free to go for any other mortgage on the market.
A guarantor is another person (usually family member) that joins you on the application, on the basis that if you don’t pay the mortgage, they have to. They are usually not on the deeds to the property and have no ownership of it, but they will have your mortgage registered to them as a commitment. It is usually assumed the applicant pays the mortgage on their own and the guarantor is there ‘just incase’.
Again, different lenders have different criteria – some ask for either full or partial affordability to be taken into account with a guarantor – some want them to afford the whole loan along with current commitments, others just to afford the shortfall. – Some have limitations on the length of time a guarantor can be on a mortgage, some don’t.
If you’re concerned about being able to afford the mortgage on your own, or have questions about guarantors on your mortgage application, its important to speak to an expert.
Several government schemes have been put in place to help first-time buyers and certain key government workers obtain mortgages.
Help to buy – buying new or existing properties with just 5% deposit.
Key government worker mortgages – for instance; teacher mortgages, mortgages for soldiers, mortgages for doctors and other professionals. Get in touch for exclusive deals.
Shared ownership/equity – see definitions below.
Right to buy – This is where your local authority or housing association grants you the ability to purchase your rented council house if you’ve lived there for a number of years and satisfied a number of other specific criteria. They usually offer a larger discount from the market value, which can be used as a deposit. For instance, you have lived in your rented council flat for 6 years, and have been granted the right to buy. The council have valued it at £65,000 and offer you a discount of £20,000. You actually purchase for £45,000 but are able to take a 100% mortgage for the full amount, with no need for deposit. The council usually tie you in to a contract for 5 years, in which time you cant sell or borrow against the equity for purposes other than home improvement.
Shared ownership mortgages are where you buy a home for say 75% of its value, and pay a developer or housing association rent on the other 25%. You’d need a mortgage on your share, so if the house was worth £100,000, and you bought 75% of it, you’d own £75,000. For this you’d need a mortgage of maximum 95% (£71,250) and put down a minimum 5% deposit (£3,750).
Similar to shared ownership, shared equity mortgages are where a buyer owns a percentage of the property, and then instead of paying rent, takes out a low/0% rate equity loan with the developer (usually), which is repaid slowly over the term.
It can be very challenging for people with bad credit to secure a mortgage. Often, you’ll have gone to and been declined by high street banks, and will need specialist advice. Mortgage brokers and IFA’s have the experience and the expertise to help you out in a situation like this. See our page on bad credit mortgages. You may also like to visit our online mortgage search engine. Again, it allows you to ‘be the broker’ and see the deals available to you. If this brings about zero results get in touch. If you have any questions or queries, drop us an enquiry or give us a call.
When you’re approaching the end of the initial rates period of your first-time buyer mortgage, most experts would advise you to check whether there are better rates available elsewhere. The whole-of-market brokers we work with can search the entire market on your behalf and tell you whether a remortgage is in your best interest.
Perhaps you want to remortgage for home improvements or release equity to invest in another property? The end of an initial rates period is often a good time to consider these things.
You won’t need to do any independent valuations, whatever lender you go with can do it for you. However if you like you can get your own specialist surveys. They are split into 3 types:
Depending on the mortgage deal you are taking, there may be a charge for the level 1 valuation. Level 2 and 3 aren’t compulsory, but are something you may want to consider, especially on older properties or those in ‘risk areas’. They can reveal some vital information about a property that otherwise may go unnoticed.
It will be a requirement in your mortgage contract that you take out buildings insurance – this is currently the only cover that is made essential with most mortgages nowadays.
Contents insurance is optional, but is always recommended. Life cover, critical illness cover, income protection, and sickness & accident cover are also vital protection options – all there to protect your property and your loved ones should anything unforeseen happen.
Although we can help you through the process, mortgage advisers don’t do the legal paperwork. This is taken care of by trained solicitors who deal with conveyancing. If you don’t have a solicitor sorted yet, make an enquiry and one of the specialists can search the market for the best prices.
There’s the actual rate you will need to pay (the ‘initial rate’), this may be a fixed rate, tracker rate or variable rate. And there is a rate you’ll switch to once your rate period ends known usually as the ‘reversionary rate’.
It is usually set at the lenders own standard variable rate (SVR), however sometimes it can be different depending on the mortgage you are applying for. APR stands for annual percentage rate and estimates the overall loan rate over a full year. For more info on rates, and specific rate definitions, see our mortgage types article.
With many lenders you will be required to already own a property if you want a buy-to-let mortgage. Some lenders in the market currently do offer buy to lets for first time buyers, but criteria is strict.
Make a full enquiry and one of the brokers we work with will find one for you.
If you’re a first-time buyer, it’s important to seek specialist advice before you apply for a mortgage to find out what your options are and make sure you pick the right one.
The brokers we work with arrange mortgages for first-time buyers today and have a strong track record when it comes to saving them time and money.
Make an enquiry and we’ll introduce you to one of them for free! There’s no obligation and there won’t be any marks on your credit report.
Looking for specialist advice? Read through our articles about different types of first time buyer mortgage situations, and how best to prepare yourself to find the right mortgage for you.
First time buyers overview
Government Mortgage Schemes
New Build Mortgages For First Time Buyers
*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
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