Quick Links
Tips for First-time Buyers | Quick guide to different types of mortgages | Check list for buying your first home
Click Here for our online Mortgage Enquiry Form or call us on 020 7243 5195
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.
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, which you will need to pay off from other means.
A 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 line 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 the 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 Bank of England Base Rate is 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, the rate usually reverts to the lender's SVR.
TIP: Some lenders offer long-term fixed rates. Some borrowers feel more comfortable knowing that their 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 however, you should 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 also 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 Bank of England Base Rate. A tracker will usually offer a mortgage rate above the BEBR and move up and down accordingly.
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 monthly repayments drop.
Flexible
These products put 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 quicker.
Click Here for our online Mortgage Enquiry Form or call us on 020 7243 5195
Hub