First Time Buyer Mortgage

There are no specific first time buyer mortgages, although many lenders will develop products specifically for the first time buyer mortgage market.

How much can I borrow as a first time buyer?

Click here to download a leaflet on the mortgage process.

Generally mortgage lenders work on multiples of salary. These vary from company to company, but a general rule of thumb is to assume that for individuals you can borrow between 3 and 4 times salary. For couples this will be around 2.5 times the joint income.

If you are a first time buyer you should consider the following:

• Do you have a deposit? If so you will obtain better interest rates, the less you need to borrow as a percentage of the value of your prospective home.
  
• Have you the money saved for mortgage costs? Many first time buyers underestimate the total fees involved with mortgages. For example, typical lending fees can be between £500 and £600. Solicitors' fees can be £400 to £500. All this needs to be paid up front. Some products have lower fees (or no fees) but you will not get the best rates on the market.

If you need to borrow more than 75% of the value of your home, depending on the mortgage lender, you may be required to pay a Mortgage Indemnity Guarantee Premium. This is a lump sum payment that insures the lender against the risk that you will not be able to make your repayments on your mortgage. This can be a significant sum - around £1500 to £2000 (although it can be added to the loan).

Of course there will be other associated costs with a mortgage - you will need to buy furniture and pay for removals etc. There is also Stamp duty of at least 1% of the value of your home if it is valued over £60000.

When you have decided whether you have enough to meet the initial costs, you must then decide which kind of mortgage will suit you. Most first time buyers opt for a repayment mortgage, but if you plan to move in a few years, perhaps to start a family, this may not be the right option. The other main option is an interest only mortgage, although not as popular as a repayment mortgage with first time buyers.

If you do not have enough money for a deposit, you may need a 100% mortgage. You will also have to decide whether you want a fixed rate mortgage, or a variable rate mortgage, or indeed another of the options available to you. Some companies offer cashback mortgages - that give you money back to spend on other costs.

Also, you may want to consider what would happen in the event that you are ill, or made unemployed. We can advise you on the best cover for these circumstances.

There are many other issues to consider as a first time buyer seeking a mortgage. The safest way to address all of these is to contact us as independent financial advisers.

Click here to download a leaflet on the mortgage process.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.