First time buyers are the lifeblood of the housing market - without them the whole process would gradually grind to a halt - but taking the first step onto the property ladder can be a daunting prospect. Being unfamiliar with the different types of mortgages on offer makes it hard to know which product is best for you - should you go for fixed or capped, tracker or variable? This is where you need specialist advice on how to make this major financial commitment simple and stress-free.

Our advisers have access to the whole mortgage market and are able to find the deal that is best suited to your needs. The wide range of products available to first time buyers these days means there will definitely be one that is better for you than another - but it would take a great deal of searching for you to find it. We know exactly where to look and what to look for, saving you time to concentrate on finding the property that will become your home.

A call to us will lift the burden of worry that goes with finding your first mortgage and make the transition to homeowner smooth and straightforward.

Click for online application form or call 020 7243 5195 for more information.

In this section:

• Tips for First-time Buyers
• Quick guide to different types of mortgages
• Check list for buying your first home

Tips for First-time Buyers

A mortgage is a large loan secured against your home usually for a standard term of 25 years however the length of term can vary with each lender. Remember that a mortgage is a secured loan, which means that the lender could take your home away if you do not keep up with payments. There are two main ways you can repay your home loan, either through a repayment scheme or an interest only scheme.

Repayment

This means that you pay back the capital and the interest of your mortgage on a monthly basis.

TIP: This provides certainty of capital repayment and is not dependant on investment return.

Interest Only

This means you pay off the interest on your mortgage but not the actual lump sum or capital you owe. Meanwhile, you may also pay cash into another investment policy, such as an ISA or a pension. You will then pay off the mortgage at the end of the term with the money you have built up in the invesment policy.

TIP: You are taking a risk with an interest only mortgage. On the one hand at the end of an investment policy you could pay the mortgage off and have some cash left over. But on the other hand, your fund could fall short; leaving you with an outstanding debt and you will need to pay off from other means.

Quick guide to different types of mortgages

Variable

A variable rate will move up and down with interest rate changes. Lenders will usually change their Standard Variable Rate (SVR) in with the Bank of England Base Rate (BEBR).

TIP: A mortgage lender`s SVR is relatively high, which usually comes into play once an offer period is over and may signal time to move to another deal.

Fixed

If you want your monthly payments to stay at a fixed rate for a set period of time, usually 2, 3 or 5 years then this is the way to go. If the BEBR seems to be on the increase, a fixed rate could save you money as it will not be affected. However, if rates drop, a fixed rate will stay the same and you will miss out on savings from the lower interest rate. After the fixed period they usually revert to the lender`s SVR.

TIP: Some lenders offer long-term fixed rates. Some may feel more comfortable knowing that thier rate will stay the same for `X` amount of years. But if rates were to drop to an all-time low, you would miss out and there are usually Early Repayment Charges (ERC) that tie you in.

Discount

These mortgages offer a discount off the lender`s SVR. The initial rate may look good; you have to remember that this is variable and could go up and down with SVR, which will in turn move in line with BEBR. Therefore, while your rate could drop, it could well rise. After the discount period, you will also revert to the SVR.

TIP: With variable discounts, your rate and your monthly repayments could rise or fall.

Tracker

These products simply track the BEBR. A tracker will usually offer a unit rate above the BEBR and move up and down in accordance.

TIP: If you are looking for consistency, this may not be the way to go. but on the other hand, it could mean your rate and your monthly repayments could drop.

Flexible

Puts you in charge of your finances allowing you to overpay, underpay, borrow back overpayments and take payment holidays.

TIP: If you can afford to make overpayments then you will pay your mortgage off more quickly.

 

Check list for buying your first home

• Decide where and what your requirements are from the property you want.
• Contact a mortgage broker; who will help you choose the right mortgage. Give you help with your application and you will recieve an `agreement in principle` on the amount you can borrow.
• Register with estate agents in the area you want to live and search on-line.
• Once you have found a property, make an offer to buy based on what you have seen and the home information pack.
• If vendor accepts offer and conditions, instruct estate agent to take the property off the market.
• Instruct a solicitior to act on your behalf; giving details of the property location and the vendor`s estate agent.
• Your solicitor will contact the vendor`s solicitor requesting title deeds to the property.
• Find a surveyor and ask for a home-buyers report or a survey to be carried out.
• The mortgage lender will carry out a valuation of the property; on sight of the property valuation and data backing up your application agrees to lend you the money for the property.
• Send the survey report to the solicitor. He will give you his view on it and you may want to discuss any remedial work you want to request.
• The solicitor will carry out local authority searches and find out if any alterations have been made. This would be the time to negotiate fixtures and fittings.
• The solicitor will finailise the details in the contract with the seller`s solicitor and confirms mortgage details with your mortgage lender.
• You pay a deposit into your solicitor`s account, which will be held untl exchange of contracts.
• On the day of exchange of contracts, your solicitor exchanges contracts with the seller`s solicitor and sends the deposit over. A date for completion (when you accept the keys and move in), which will have been proposed before-hand, is agreed upon.
• Your solictior will liaise with your lender to ensure the mortgage is available on the completion date and will prepare the property transfer deed, which is signed by you and the seller, and lodged with the seller`s solicitor until completion.
• The mortgage lender transfers the money into your solicitior`s account ready for completion.
• On completion day, your solicitor transfers the money to the sellers` solicitor in return for the transfer deed, Land Registry certificate and the keys. The sale is completed.
• Your solicitor arranges for the transfer deed to be stamped, pays the stamp duty and sends the transfer deed to the Land Registry to record you as the new owner.
• Your solicitor passes the deed to your mortgage lender as security for the loan and then he will send you the bill for his services and costs.

 

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