Easy Guide To First Time Buyer Mortgages

By Author: Lucy Carter
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For those who are looking to jump on the property ladder for the first time, understanding the different mortgage products and which one will best suit them can be confusing. The following guide will help you navigate first time buyer mortgages and forewarn you against common pitfalls.

Saving for your down payment

Most people scrupulously save as much as they can to try raise the highest down payment possible when taking out a mortgage for the first time, since this will lessen the amount they need to borrow and thus their monthly repayments. This focus however can see people neglecting other debts such as outstanding credit card amounts. The experts agree however that it's better to pay off your other debts, because the interest rates accrued on them will in the long term prevent you freeing cash to save for the down payment.

Researching your choices

It's crucial to carefully research and compare the different mortgages available on the marketplace so that you can make an informed decision on what will suit you best. Also do the math using a mortgage repayments calculator to be fully aware on how ...
... the repayment schemes will affect your bank balance.

The option of mortgage brokers

First time mortgage buyers can be overwhelmed with the flood of offers, charges and paperwork they need to tackle. While mortgage brokers cost an added fee to budget for, they can often be well worth the spend in helping you both make the right choice and navigate the legalities.

Weighing the right fit

Deciding on which mortgage will best suit you depends on your individual circumstances. It also comes down to the risk level you are willing to take. For example, a fixed rate of repayment will give some the peace of mind they need, whereas a variable rate can be appealing to others as it generally offers savings (although they might get stung if the rate rises unexpectedly).

Understanding the fine print

Some mortgage lenders offer highly attractive rates of interest, but charge heavy hidden fees elsewhere. While reading all the fine print in your potential lender's Terms & Conditions can be laborious and dull, it's important when deciding if a mortgage deal is in fact the most suitable for you. As a first time mortgage buyer you might understandably find the details and jargon words highly confusing and overwhelming. Since you are making a huge financial commitment, don't be afraid to grill your potential lender or independent broker on all the details until you feel you thoroughly understand the costs and implications involved.

Being realistic about your repayments

It can be tempting to understate your monthly outgoing expenditures and overstate your household monthly income in your application form so that your repayment period is shorter. Beware of doing this however as not only could it invalidate your agreement as illegal misinformation when your lender runs credit checks, the real risk is that you could end up in a situation of monthly repayments that are putting too great a strain on your bank balance. Also be aware that interest rates can rise - this added cost could be difficult to meet if you are already stretched to your limits. In some cases it might be wise to spend more time saving for a bigger mortgage down payment or going for a longer repayment period instead of borrowing more than you can realistically afford to pay back.

Planning and flexibility for the future

Mortgage lenders often offer their most attractive deals to first time property buyers. There is the risk though that when the deal ends you could be put on a standard variable rate which is costly. Make sure you find out whether your lender will offer you further attractive deals when your current one expires. It's also important to find out what their early repayment charges are as many lenders make them high to discourage you from switching to a competitor. Bear in mind that the flexibility to remortgage in the future can often allow you to take advantage of better or more suitable offers.

With the range of first time buyer mortgages constantly becoming available on the marketplace, above all it's essential to take the time to do your research, make sure you understand the implications of different products and carefully choose the repayment costs that will suit your finances best.
Sean Raston - economics student and expert in first time buyer mortgages.