First Time Buyer Mortgages




First Time Buyer Mortgages


In recent years first-time buyers have found property prices rising and more than that the deposits required to buy that first home have increased. In short it has become harder for first-time buyers to get into the market.

Up until recently there have been a number of attractive deals for first-time buyer mortgages including free legal fees and substantially discounted rates. Some lenders have offered mortgages of up to five times salary however the rising price of property has made the first-time buyer mortgages purchase very difficult.


Credit Crunch & First-Time Buyer Mortgages market


Lenders are currently restricting the deals that they will offer for first-time buyer mortgages because of the credit crunch. The standard loan to value rate is now 90% or less in many cases and the amount of the loan is again cut to three times the salary of the borrower. First-time buyers are waiting longer to get on to the property market because it is taking longer to get the deposit required for the lower loan to value rates.

There is some hope, interest rates are starting to fall as are property prices and this may encourage first-time buyers to invest in first time buyer mortgages.


Try To Avoid Negative Equity

Those looking for first time buyer mortgages will already be stretched by mortgage repayments are wary of starting on the property ladder knowing that the potential for house prices to drop is there and if they do it will lead to negative equity. The possibility is there in any economic climate and it is up to the purchaser to decide on the right time to buy.


First Time Buyers - Stages of a Property Purchase with First time Buyer mortgages.


Normally a first purchase is a long-considered project however in the current economic climate it should be planned and researched in detail. Financial planning is essential and the proper research into available mortgage deals and actual properties will save you money and ensure the best possible outcome.


Getting Started with first time buyer mortgages


Before even looking at property there are a few things you can do to improve your situation; save as much as possible for a deposit, this will open up more possibilities for the mortgage and deal you will be eligible for. Address your credit history, reducing debts and credit card bills will give you a better credit rating and as before put you in a better position to get a better first time buyer mortgages.


Calculating How Much You Can Afford


The cost of owning a property are not limited to mortgage payments so you will need to estimate your likely outgoings; bills and council tax for example. After those are paid what remains from your incomings is what you can afford for mortgage payments. There will also be costs associated with the purchase itself, legal fees, furniture removals etc.


Choosing a Property


Once you have worked out how much you can afford, decide what sort of property you are looking for and which features are essential or desirable:

Other factors maybe to do with the location of the property:

First Time Buyer Mortgages Options And Making An Offer


The next step once you have chosen your property is to make an offer, at this point you will need to clarify a lot of detail regarding what is included in the price and what is not. You will also need to decide on whether or not a full survey is required or whether the lender’s valuation survey will suffice.


Exchange and Completion


At this stage of the purchase, exchange, you are committed to buying the property, your offer has been accepted, mortgage is in place and all necessary legal work has been done before actual purchase. At exchange of contracts the deposit is paid, usually 10%. After exchange of contracts you will suffer penalties if you pull out of the purchase.

Between exchange and completion you will need to arrange buildings insurance cover and sort out all the practicalities of moving house such as removals.

On the completion date the money for the purchase is transferred to the vendor and all remaining payments such as stamp duty are paid by your solicitor. All outstanding legal documentation is also completed.


What First Time Buyers Sometimes Forget – or Never Even Knew!


There are a few matters associated with property purchase that if no-one tells you will only become apparent with experience. Here are a few of them:


A second opinion: Possibly the most influential factor in buying a property for the first time is the viewing. It is easy to miss a lot of detail in the amount of time you have so it is best to take someone with you. If you feel you have not seen everything you need to you can always arrange a second viewing.


Initial costs: Although the mortgage is usually the biggest cost associated with buying a property there are a number of others that must be remembered:

Living costs: There will also be ongoing costs once you have moved in, there will be utility bills, insurances and council tax. Most can be paid monthly and make budgeting much more predictable:

School catchment area: Whether or not you have (or are planning) to have children, remember that the quality of local state schools exerts a major influence on property prices. A house in a reputable school catchment area will always be easier to resell.


Amenities: Decide what type of amenities matter to you. Do you want to be near shops, pubs and restaurants or would closeness to a park matter more to you Buying the right property is not simply a matter of bricks and mortar.


Car considerations: The cost of your car insurance will depend very much on whether your property is classified as being in a high crime or low crime area. If you have a lock-up garage or even just off-street parking, then your car insurance premiums will be reduced.


First Time Buyer mortgages– Sharing a Property


In areas where property prices (and rents) are particularly high, an increasing number of people are joining forces with friends to purchase property instead of sharing the traditional rented house or flat.

This approach offers sharers the opportunity to get on to the property ladder, together, earlier than they would be able to individually and hence to share the benefits of any subsequent rise in property prices.


Sharing a Property – Mortgage Options


Many (but not all) financial institutions will offer mortgages for up to four people. However, they may not necessarily take all four incomes fully into account when calculating the size of the available loan. Consulting a mortgage broker might help you to identify the most suitable mortgage products for a shared purchase.


Sharing a Property – Potential Pitfalls


In order to make a success of a shared property purchase, a number of factors need to be considered:

Most sharers will want to move on to another property, within a few years, and often at different times, so it is important that details of each person’s share and deposit paid are documented, preferably by a solicitor, so that there are no disputes about who owns what. Similarly, mortgage payment obligations should also be agreed and documented.

Several unrelated people living within a house will require a different distribution of space (personal space in particular) compared with a couple, if they are to coexist harmoniously. A Victorian or Edwardian house with several reception rooms, a basement and more than one bathroom is likely to be more appropriate than a modern, open plan property.

Buying an easy to maintain property in good condition is recommended because friction will be reduced between sharers over potential extra costs for repairs and who is responsible for doing what maintenance. A well maintained property will also be easier to resell when the time comes.

For a successful shared property purchase, stick to the mainstream and leave the more eccentric types of property to individuals and couples!




Buy to let mortgages are not typically regulated by the FSA


Commercial Mortgages and Buy to let mortgages are not typically regulated by the FSA


We do not charge a fee for mortgage advice. A fee based option is available of typically 2% of the mortgage amount.
For example on a loan of £25,000 the fee would be £500

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