FIRST TIME BUYER MORTGAGES
Updated 21st May 2021.
First-Time Buyers Mortgage Advisors.
Our Mortgage Experts Online accredited advisors are specialists in first time buyer mortgages. Subsequently, our expert’s knowledge will help you to find the right first-time buyer mortgage.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. As a first-time buyer this may feel completely overwhelming to you. Likewise, you may have no idea where to start. We can offer you guidance and help you navigate the complex world of first-time buyer mortgages.
The brokers we work with are whole of market and offer completely unbiased advice, Thereby, ensuring that you get the absolute best deal available.
This guide will explain what you should know about first-time buyer mortgages, however, we cannot explain everything on one article. Every first-time buyer’s situation is different.
Scroll down for more information and FAQ’s.
Can I get a first-time buyer mortgage?
This will depend on a wide variety of different factors, firstly, your mortgage advisor will need to know about your credit history. In this instance, obtaining a “Check my File “credit report will give all the information across all 3 reporting agencies.
Every lender has their own system and method for calculating their internal credit score. For example, some factors that will affect the internal score.
- Employment statues.
- Address history & electoral role.
- Financially linked to another person.
- Missed payments on credit file.
- Adverse credit, defaults, CCJ etc.
However, not all lenders use a credit score and instead credit profile. This means they look at the information on your credit report and ignore the credit score.
The first-time buyer mortgage market is constantly changing, for the most up to date information make an enquiry and speak to an expert today.
Should I buy my own property?
Getting a mortgage is the biggest financial commitment most people will ever make. Subsequently, it should be taken extremely seriously, however, as daunting as it may seem for a first-time buyer it does not have to be a difficult process.
Using a mortgage broker is always the best advice. If you go directly to your bank, you will only be offered the limited products they have (if you are accepted at all).
In addition to arranging your mortgage your advisor will also look at your personal protection and arrange your building and contents insurance.
There are many advantages to being a homeowner, however, it is not always the right choice and speaking to a first-time buyer mortgage expert will ensure you have all the facts before committing to any purchase.
How much deposit will I need?
One of, if not the biggest hurdle for first-time buyers is raising the initial deposit. As things stands the minimum deposit needed is 5%, this is only available on the Help to Buy Scheme. For a standard house purchase you would need a minimum of 10% deposit.
There are several ways you can get help towards your deposit. Firstly, gifted deposit for a family member. This is where some or all the deposit is gifted to you by family or some instances friends. Secondly, there is the family springboard option. Click here to read all about family springboard mortgages. Thirdly, there are options involving a guarantor.
Furthermore, every lender has vastly different criteria around the deposit they will accept. Your first-time buyer mortgage advisor will explain all the options available to you.
Which mortgage type is best for a first-time buyer?
Most mortgages tend to fall into two categories. Fixed rate and tracker rate mortgages. There are other sorts of mortgages available, however, most first-time buyers will choose the one of the above. Generally, once the fixed rate period has ended the mortgage will revert to lenders SVR – Standard Variable Rate.
Fixed rate mortgages
This is when your mortgage rate is fixed for a set period, normally, 2 or 5 years. The benefit of this is your monthly payment will remain the same, hence, this allows you to effectively budget every month. Most fixed rate mortgages will come with an early repayment charge if you pay off the mortgage amount early or change the terms of your mortgage. Because of the potential for ERC, it can be a good idea to start off with a 2-year fixed rate.
Tracker rate mortgages
Tracker rate mortgages are generally tied into following the Bank of England base rate. Therefore, your monthly payment could increase or decrease depending on the fluctuation on the BOE base rate. Bank of England base rate is decided every 3 months. However, some lenders have their own SVR which trackers may also follow. This is particularly true when dealing with building societies.
For the most part, first-time buyers are more likely to be wanting a repayment mortgage. This means you are paying the interest as well as the repayment of the loan. In short once your mortgage is completed and if all payments are made on time, you will have paid for the house.
This is normally the best advice; however, every situation is different. Always speak to a mortgage expert before committing to anything.
These mortgages are now most common in the buy-to-let mortgage market. Because you are only paying the interest on the loan and not repaying any capital this is not an ideal situation for a first-time buyer. Most lenders do not have products available for interest only for first-time buyers. Coupled with enhanced criteria for offering interest-only mortgages in general, therefore making this an extremely difficult option.
First-time buyer mortgage costs
As with any mortgage there will be fees you need to be aware of and importantly budget for. Your mortgage experts will be able to give you a breakdown of costs, however, this is something you should always double check yourself and be aware of before committing to any purchase.
Some mortgages will come with addition fees, such as, arrangement & valuation fees. Generally, lender arrangement fees can be added to the mortgage loan. Most mortgages will have a mortgage exit fee; however, this is not payable until you redeem the mortgage or move to another lender.
Whenever you purchase any property, you will always need a legal expert to handle the process. They will also ensure that all lender requirements are met in the transaction. The cost can vary for these services, subsequently, it is advisable to get a couple of quotes yourself and one from your mortgage expert.
Great news, first-time buyers paying £300,000 or less will pay no Stamp Duty Land Tax (SDLT)
First time buyers paying between £300,000 and £500,000 will pay SDLT at 5% on the amount of the purchase price more than £300,000, a reduction of £5,000 compared to the amount of SDLT they would have previously paid.
A first-time buyer is defined as an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence.
First time buyers purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates.
The relief must be claimed in an SDLT return.
For the most up to date government guidance on first time buyer stamp duty click here.
The minimum insurance requirement is building insurance, this is a requirement from the mortgage lender. In addition to buildings insurance, most people also take-out contents cover. This insurance is designed to cover any damage or theft for your personal belonging. However, if you have items of high value then extra cover will needed. Your first-time buyer mortgage expert will be able to arrange both types of cover for you.
Life cover can be used for a variety of purposes. For mortgage purposes you can use life cover to protect the full mortgage amount and any associated fees. Furthermore, you can also add a lump sum payment in addition, this will help the surviving person with any additional costs and drop in household income.
Critical illness cover
This is designed to protect you should you be diagnosed with a critical illness. This cover will pay a lump sum as decided when taking out the policy. Critical illness cover is more expensive than life cover, namely because its more claimed than life cover. Some insurance companies have enhanced critical illness cover options. Always speak to your first-time buyer mortgage expert before taking out any insurance cover.
Income protection can insure you for your monthly income, this is for if you are off work with an illness or because of an accident. Generally, this policy will pay out as a monthly lump sum. This type of cover is often the least taken insurance policy, however, this is a policy that would be most beneficial to a first-time buyer.
Family income benefit
This is another form of life insurance that will provide a regular income for your family if you die during the term of the insurance plan. Once you stop making payments the cover will automatically stop.
All insurance products should be individually tailored to your own circumstances. Subsequently, your mortgage experts will perform an insurance review with you to ensure you have all the information to make an informed choice.
First-time buyer mortgage advisors
There are many lenders available ranging from high street to specialist lenders, as a result, most people go to their own bank, get declined or cannot borrow what they need. Remember, just because one lender has declined you, don not give up!
Above all, our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances, Likewise, all the mortgage brokers we work with are whole of market and offer unbiased advice. As such, will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.
Lastly, the expert advisors we work with have experience in dealing with all aspects of first-time buyer mortgages. All the experts we work with are vastly experienced, in addition, to using the whole of the market to access the best deals available.