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First Time Buyer Mortgage

Get The Best Mortgage Deal On Your First Home

First-Time Buyer Mortgages: Your Complete Guide

Are you a first-time buyer eager to step into the world of homeownership? Congratulations on this exciting journey! Buying your first home is a significant milestone, and it's essential to navigate the process wisely. To help you make informed decisions, we've compiled this comprehensive guide to first-time buyer mortgages, featuring essential information and expert advice.

Understanding First-Time Buyer Mortgages

Deposit and Loan-to-Value (LTV)

One of the first considerations is your deposit. Typically, first-time buyers need to save a deposit of 5-10% of the property value. A larger deposit can secure you better rates. If you're struggling to save, explore options like the First Homes Scheme, which offers discounts to local first-time buyers. Additionally, the 95% mortgage scheme can help you purchase a property with a smaller deposit. Some lenders even offer 100% mortgages where no deposit is required.

Mortgage Types

There are various mortgage types to choose from, each with its pros and cons:

  • Fixed-rate mortgages: These mortgages offer a stable interest rate for a set period, usually 2-10 years, providing predictability for your monthly repayments.

  • Tracker mortgages: Linked to the Bank of England's base rate, these mortgages move up or down accordingly.

  • Standard variable rate (SVR) mortgages: This is the default rate after your fixed or tracker rate period ends.

  • Offset mortgages: Link your mortgage to your savings account, reducing interest paid.

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Mortgage Application Process

1. Assess Your Financial Situation

  • Budget and Savings: Start by assessing your finances. Determine how much you can afford to spend on a property and calculate your budget, taking into account your income, monthly expenses, and savings for a deposit.

  • Credit Score: Check your credit score, as it plays a significant role in mortgage approval and interest rates. A poor credit score can result in higher interest rates or rejection, so work on improving it if needed

2. Determine Your Budget and Deposit

  • Deposit: Decide how much you can afford to put down as a deposit. Most first-time buyers aim for a deposit of 5-10% of the property's purchase price. A larger deposit can lead to better mortgage deals.

  • Budget: Based on your deposit and financial situation, establish a budget for your home purchase, including estimated monthly mortgage payments. To do this, try using our mortgage payment calculator.

3. Explore Mortgage Types

  • There are various mortgage types to choose from, each with its pros and cons:

    • Fixed-rate mortgages: These mortgages offer a stable interest rate for a set period, usually 2-10 years, providing predictability for your monthly repayments.

    • Tracker mortgages: Linked to the Bank of England's base rate, these mortgages move up or down accordingly.

    • Standard variable rate (SVR) mortgages: This is the default rate after your fixed or tracker rate period ends.

    • Offset mortgages: Link your mortgage to your savings account, reducing interest paid.

    • More information can be found in our which type of mortgage is right for me guide

4. Mortgage Application

  • Affordability Assessment: Lenders assess your ability to make mortgage repayments based on factors like income, expenses, savings, and credit history. Our guide on how mortgage lenders assess affordability may help here.

  • Credit Checks: Lenders perform credit checks to evaluate your creditworthiness. A good credit score can lead to better mortgage deals.

5. Expert Mortgage Advisers

  • Navigating the mortgage process as a first-time buyer can be daunting. That's where expert mortgage advisers come in. They provide independent advice and help you find the best deals tailored to your circumstances. While there may be a fee for mortgage advice, their expertise can save you money in the long run. Check out our top 5 reasons to use a mortgage broker.

6. Property Search

  • Begin your search for a suitable property within your budget. Consider factors like location, size, amenities, and future growth potential. Check out our top tips for buying a property.

7. Make an Offer

  • Once you find a property you like, make an offer to the seller. If the offer is accepted, you'll move on to the next steps. Have a look at our guide on how to negotiate the price of a house if you need some more help here.

8. Property Valuation

  • The lender typically arranges a property valuation to ensure the property's value aligns with the purchase price. This step protects both you and the lender. You may also want to look at one of the different types of property survey of your own at this point.

9. Mortgage Offer

  • If your mortgage application is approved, the lender will issue a formal mortgage offer. This document outlines the loan amount, interest rate, and any conditions you must meet.

10. Conveyancing

  • Appoint a solicitor or conveyancer to handle the legal aspects of the property purchase, including searches, contracts, and property transfer. A mortgage broker can do this for you if you want their assistance. You can read through the conveyancing process and what searches are in our blog

11. Exchange Contracts

  • Once all legal matters are settled, you'll exchange contracts with the seller. This is a legally binding agreement to purchase the property.

12. Completion

  • On the agreed-upon completion date, your solicitor will transfer funds to the seller, and you'll receive the keys to your new home.

13. Moving In

  • Finally, you can move into your new home and begin your exciting journey as a homeowner.

14. Protecting Your Investment

  • When you become a homeowner, it's crucial to protect your investment:

    • Buildings Insurance: Lenders require this to cover repair costs from unexpected events like fire or flooding, protecting both your assets and theirs.

    • Contents Insurance: Safeguard your belongings within the property.

    • Life Insurance: Ensure your loved ones can cover the mortgage if something happens to you.

    • Critical Illness Cover: Provides financial support if you're unable to work due to illness.

    • Income Protection for Mortgage Repayments: Offers peace of mind in case of income loss.

Remember that the mortgage process may vary slightly depending on your location and specific circumstances. Seeking professional advice and guidance throughout the process can help ensure a smooth and successful home purchase.

Stamp Duty Considerations

As of September 2022, first-time buyers in England and Northern Ireland are exempt from paying stamp duty on properties up to £425,000. For properties costing between £425,001 and £625,000, a 5% stamp duty applies only on the amount exceeding £425,000. In Wales, while there is no first time buyer relief, you won't pay any Land Transaction Tax (formerly Stamp Duty) on purchases up to £225,000. Different rules apply to Scotland.

Conclusion

Becoming a first-time homeowner is an exciting step, and choosing the right mortgage is crucial. Take advantage of expert advice, explore available schemes, and protect your investment with the right insurance coverage. With the right guidance, you can confidently embark on this homeownership journey.

If you're ready to explore your first-time buyer mortgage options, don't hesitate to contact an expert mortgage advisers for personalised assistance.

Your dream home awaits—let's make it a reality together!

David Williams trading as Greymere Finance (FCA No.944564) is an Appointed Representation of Julian Harris Mortgages Ltd (FCA No.304155) which is authorised and regulated by the Financial Conduct Authority No. 304155

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Whatever type of mortgage rate you prefer, we've got you covered. The tables below show you this weeks best buys on offer.

Looking for a mortgage broker in Chester, Wrexham, Flintshire or Denbighshire? Greymere Finance offers mortgage advice both locally and nationally.

A few things to remember when considering which type of mortgage is right for you

  • Interest rate isn't everything. Look at the total amount you're going to repay over the initial period. This takes into account the monthly repayment, any fees and any cash back incentives.

  • Initial terms vary and comparing a 2 year, 5 year or 10 year isn't as simple as looking at the rate or total to repay. This needs careful consideration about your future circumstances. Also check out our guide on which type of mortgage is right for you

  • While best mortgage rates give a good idea of the market, this doesn't mean all rates will be available to everyone. Each lender has its own criteria which might consider someone's credit file, their job, the type or size of a property or your affordability.

  • If in doubt, just ask. We're happy to help.

Based on a mortgage of £125,000 at 95% LTV

Initial Rate
Fixed Till
Then
5.22%
31/10/2029
7.49%
5.22%
31/10/2029
7.49%
5.24%
31/10/2029
7.99%

* Rates updated weekly each Monday and based on cheapest products available. Products you can obtain may differ. 

Check out our mortgage calculator to see what you might be able to borrow

Contact us to get the best rates on 01244 267682

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