Embarking on the journey of purchasing your first home is an exciting but often overwhelming experience. With many factors to consider, from mortgage rates to deposit schemes, the process can seem daunting. That’s where a First Time Buyer Mortgage Advisor comes in – your compass in the complex world of homeownership.
The Mortgage Process as a First-Time Buyer
Understanding the mortgage process is crucial for first-time buyers. It involves assessing your financial situation, understanding mortgage rates, and choosing the right mortgage deal. A First Time Buyer Mortgage Advisor will guide you through each step, ensuring you make informed decisions.
The Benefits of Working with a First Time Buyer Mortgage Advisor
The benefits of engaging a mortgage advisor are manifold. They provide personalised advice, help in comparing various mortgage deals, and assist in understanding complex terms. Their expertise can be invaluable in securing a mortgage that fits your unique financial situation and homeownership goals.
What to Expect from a First Time Buyer Mortgage Advisor
Expect your mortgage advisor to be a knowledgeable guide. They should provide a comprehensive overview of the mortgage landscape, assist in using tools like mortgage calculators, and explain government schemes like Help to Buy or Shared Ownership. Your advisor will also clarify costs like stamp duty and moving expenses.
How to get a first time buyer mortgage?
If you’re looking for knowledgeable, trustworthy, and straightforward mortgage advice, we’ve got you covered. With years of experience navigating the First time buyer market, our team at Kerr & Watson is here to guide you through every step of your mortgage journey.
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Who Are Kerr & Watson?
Kerr & Watson is an independent regulated mortgage and insurance broker with access to the whole market.
We have a wealth of experience and strong industry relationships with high street providers, specialist lenders and insurers. This puts us in a prime position to secure your perfect mortgage and insurance policies.
We’ll provide you with a tailored financial solution to meet your individual needs.
What is a First Time Buyer Mortgage
A mortgage tailored for first-time buyers is specifically designed to help individuals who are stepping into the world of property ownership for the first time. These mortgages often allow for a smaller initial deposit, sometimes as low as 5% or 10% of the property’s value. This translates to the possibility of borrowing up to 95% of your future home’s value, often referred to as a 95% loan-to-value mortgage.
When applying for a mortgage, first-time buyers undergo an affordability assessment and credit check. If your deposit aligns with the lender’s requirements and they deem the mortgage affordable for you, you’re on track to buying your first home.
Our mortgage calculators are a great tool to estimate the monthly repayments for mortgages of various sizes at different interest rates.
How much Deposit Do First-Time Buyers need for a mortgage?
Typically, first-time buyers need at least a 5% cash deposit of the property’s value.
The larger your deposit, the better your chances of mortgage approval and securing a lower interest rate. It’s beneficial to save as much as possible. Having a deposit of 15% or 20% often results in a lower interest rate compared to a 5% or 10% deposit.
In addition to saving, you might consider government schemes or family assistance to increase your deposit. However, it’s essential to remember other costs involved in purchasing property, such as mortgage arrangement fees, solicitor’s fees, surveys, and property searches.
Do you pay stamp duty as a first-time buyer?
First-time buyers are sometimes exempt from stamp duty. Use our stamp duty calculator to estimate your potential costs.
How much can I borrow for a mortgage as a first-time buyer?
Generally, first-time buyers can borrow up to four-and-a-half times their single or joint income. However, the actual amount you can borrow will depend on the lender’s affordability assessment, which considers your income and expenditures. This rigorous process includes evaluating debts, car costs, childcare fees, household bills, and even grocery bills.
Lenders also factor in an ‘assumed’ interest rate, higher than the advertised rate, to account for potential rate increases. They will consider the mortgage term, usually between 25 and 30 years, and your credit history. Improving your credit score is crucial in the lead-up to applying for a mortgage. You can get a free report from CheckMyFile who offer a 7-day free trial after which a subscription fee applies, which can be cancelled any time. This shows the credit information from agencies such as Experian, Equifax and Call Credit. Check My File will also help you understand and improve your credit score.
Use our Residential Mortgage Borrowing Calculator to estimate how much you can borrow.
How long does it take for a first-time buyer to get a mortgage?
It’s advisable to begin the mortgage application process, through an independent broker like Kerr & Watson, before starting your property search. Obtaining a mortgage agreement in principle (AIP) early on is beneficial. While an AIP is not a loan guarantee, it indicates the amount a lender might offer and demonstrates your seriousness to sellers. It’s essential to confirm whether a soft or full credit check is required for an AIP, as the latter affects your credit score.
What is the best mortgage type for first-time buyers?
First-time buyers have a couple of mortgage options:
- Fixed-rate: Locks in an interest rate for a set period, offering stability in monthly repayments.
- Tracker or Variable rate: The rate fluctuates with the Bank of England Base rate, affecting.
Deciding between a fixed or variable rate mortgage hinges on your personal situation and how comfortable you are with the potential of fluctuating interest rates. Opting for a fixed-rate mortgage provides stability, locking in your interest rate for a specified period. This consistency can be particularly beneficial for budget planning, especially for first-time homebuyers who might be managing tight finances due to moving expenses.
On the other hand, if your budget allows for some flexibility and you speculate that interest rates have reached their peak and might decrease, you might consider a variable rate mortgage, like a tracker rate mortgage. However, it’s crucial to keep in mind that with a variable rate, your monthly payments could increase if interest rates rise.
Mortgage Broker vs Bank: What’s Best for First-Time Buyers?
As a first-time buyer, you might wonder whether to approach your own bank directly for a mortgage or use an independent mortgage broker. In most cases, working with a whole-of-market mortgage advisor gives you a significant advantage. An independent broker has access to over a hundred lenders – from high street banks to specialist lenders – and can compare hundreds of deals on your behalf. This is especially helpful for first-time buyers who may benefit from niche products. For example, you might consider a Joint Borrower Sole Proprietor mortgage if you need parental help or a deal for buyers with smaller deposits or complex incomes.
In contrast, a bank can only offer you its own mortgage products, which might not be the best fit for your situation. Moreover, a broker will handle much of the paperwork, guide you through eligibility criteria, and know which lenders are more likely to accept your application – potentially saving you from multiple credit checks or refusals. While some bank advisors are tied to one option, an independent mortgage advisor works for you, not any particular lender. For first-time buyers seeking the best chance of approval and a competitive rate, the impartial guidance of a mortgage broker can be invaluable on your home-buying journey.
Conclusion
First-time buyer mortgages are specialised financial products designed to help new entrants into the housing market purchase their first home. First-time buyer mortgages often feature competitive interest rates and may include additional benefits like cashback or reduced fees to make home-buying more accessible. While they present an exciting opportunity to own a home, they also carry the responsibility of long-term financial commitment. It is crucial for first-time buyers to conduct thorough research, budget wisely, and seek professional financial advice to ensure the decision fits their personal and financial circumstances.
Contact Kerr & Watson today for assistance with your first time buyer mortgage.
