Mortgage UK – Helping first time buyers make that first step on the property ladder.

Owning a home has clear advantages over renting, such as the benefits of having made a long-term investment. But getting on the property ladder may well seem beyond the reach of many people. This need not be the case with the right first time buyer mortgage, taking that first step on the big ladder of property ownership has so very many benefits.

Mortgage lenders are all for first-time buyers, because once obtained, they may hold on to them as borrowers for many years and perceptively sell them on to larger mortgages. But, first-time buyers are learning to be more and more astute. Today, more people are likely to shop around following the paying off of any redemption penalties (By and large, this is about three years after the taking out of the mortgage). Apathy still exists, however, and so first-time buyers remain appealing to mortgage lenders. This is why mortgages presented to first-time buyers are often found to include competitive incentives.

While there are no guarantees with owning a property, there is the likelihood it will raise in value and, even if you decide to leave it, you have the option of selling or becoming a landlord yourself, and hopefully making a good profit.

It is worth bearing in mind that despite how appealing owning rather than simply renting a property is, buyers should be careful not to become financially overstretched. Negative equity - when your mortgage outstrips the value of your home – hasn’t been so prevalent in the headlines of recent times, but some are predicting it will rematerialize.

You would be able to find mortgage lenders that will offer as much as five times' salary and 100% of the property's value. However, the Financial Services Authority recommends that single home buyers should borrow up to a total of three times' salary and two and a half times' salary for mortgaging couples.

It is common for first-time buyers to choose a repayment mortgage. Endowments are mostly dying out in the wake of a miss-selling scandal. Flexible mortgages are certainly worth taking into consideration. There may be fewer incentives offered to first-time buyers, but they are well suited to buyers who can pay off large amounts of capital. No one can accurately predict what will happen to interest rates and so a discounted rate can be a good deal. Equally, a fixed rate mortgage can have benefits - providing the interest rate does not fall further still. Deals will usually only last for a three year period. After this, you should shop around for other deals in the market.
Interest only mortgages can be beneficial for those who want to keep their repayments low. Some lenders will offer an interest-only deal for three years - but you will have made no inroads into the capital. The government recently launched a kite mark for financial products; Cat-marked mortgages. Cat stands for cost, access and terms and, while it is a new entity, some mortgages that fit the criteria are becoming available.