Mortgages for First Time Buyers

Mortgages for first time buyers make the process of purchasing a home easier and more affordable. If this is your first time buying a home, navigating the complexities of home financing can be an overwhelming task. Lenders and brokers who specialise in mortgages for first time buyers can facilitate the process and show you how to achieve competitive deals for buyers who are new to the market.

Taking out a mortgage loan represents a serious, long term financial commitment as well as an exciting first step towards becoming a full fledged property owner. When you begin shopping for loans, you'll see that you have a variety of interest rates and repayment methods to choose from. Mortgages deals for first time buyers offer terms that are easy for first time applicants to live with for years to come. Get in touch with a number of FSA regulated brokers and lenders to find the best deals for buyers who are just entering the market.

100 Percent Mortgage

In the past, first time buyers could easily avail 100 percent mortgages, which allowed them to finance a home with no cash deposit. Because the home deposit represents a stumbling block for many young families, the 100 percent mortgage enabled many first time buyers to make this significant investment with no cash down. However, buyers soon found that rates were much higher for 100 percent loans, and maintaining repayments was unrealistic.

Changes in the economy have led to a decline in the number of 100 percent mortgages on the market. Over time, lenders have become more careful about helping new applicants find loans they can afford. With most mortgages lasting 25 years or more, it's important to anticipate not only the fluctuations in the economy, but the possible fluctuations in your own income over the years. Use a repayment calculator for mortgages to determine how much money you can afford to repay each month before you commit to mortgages for first time buyers.

Rather than counting on risky 100 percent schemes, it's best to save or borrow enough money to make a deposit of at least 5 to 10 percent of the property value before you shop for mortgages for first time home buyers. With the proper cash in hand, you'll find that lenders are more willing to offer you the best deals. A larger deposit will lower your monthly repayments and may help you qualify for lower rates, as well.

Fixed Rate Mortgages

Promotional mortgages for first time buyers offer initial introductory rates that allow new property owners to save money in the initial years of their contract. As you grow accustomed to making your monthly repayments, you may have a bit of cash left over to build an emergency fund or make a few improvements in your house. After the initial 1 to 5 years, these promotional deals generally revert to the Standard Variable Rate, or SVR.

Variable mortgages for first time buyers are among the most popular arrangements. Variable interest rates are based on the SVR, which is based on the Bank of England's rate for all monetary policy in the UK. These schemes are called "variable" because the lender may adjust the rates within a certain margin, causing the interest rate on your loan to vary. In addition, your monthly repayments may rise or fall.

With fixed rate mortgages for first time buyers, your rate remains set for an established period before reverting to the SVR. In an effort to have your business, lenders may offer you fixed, capped or discount loans. These deals make it easier to cope with property ownership in the beginning. However, you must be prepared to pay higher monthly repayments after the promotional period has ended.

Mortgage Protection Insurance

In order to minimise the costs associated with mortgages for first time buyers, you can invest in mortgage protection insurance. Mortgage protection is a form of term life insurance, which pays off your house loan in the event of your early death. Your insurance policy will also pay off your loan if you default on your repayments, and the property isn't valuable enough to pay off the balance. Lenders may offer a discount if you agree to purchase a policy to protect your loan.

Making a larger down payment is one of the most effective ways to reduce your monthly outgoings. Affordable mortgages for first time buyers are far easier to find when you can offer your lender a considerable sum of cash. Applicants may also improve their chances of getting the most competitive deals if they reduce debts before applying for loans and address any flaws in their credit rating. The better prepared you are financially to own a house, the more satisfied you'll be with your purchase in the years ahead.