First time buyers have never had it easy. Itís always been a big step, starting off in home ownership. It can be expensive, it can be stressful, it requires patience, and thereís a lot to learn very quickly. The turmoil weíve seen in the financial markets over the past couple of years has not helped. Lenders are now more careful about who they lend to, and how much they are prepared to lend.
Mortgages are priced according to risk. Generally, the riskier the applicant, the more they will pay in interest. So itís well worth showing the lender that you are a good bet for a home loan, as the more attractive you are, the better the deal you will get.
The size of your deposit is the biggest factor nowadays in getting the best deal. Although some lenders - now offer mortgages at 95% loan to value, which means you only need a deposit of five per cent, rates are lower if you can put down more cash at the start. So if you are planning to buy a new home, it may be worthwhile taking a little extra time to build that deposit further.
When you apply for a mortgage, the lender will access your credit record. This is a listing of your financial history, normally over the past six years. It will tell the lender what other credit accounts you have, and whether you have run those accounts sensibly.
Some lenders will also credit score you. This is literally a score - the higher the score, the less risk you are assumed to have. Your score is based on a number of factors, including your credit history.
Most lenders now work out how much you can borrow based on an affordability calculation. So in addition to looking at your salary, they will also examine any other commitments you have. So if you do have other loans or other financial commitments, then this will usually mean you can borrow less.
Lenders like to see a stable financial history, and part of that comes from steady employment. You are likely to need to prove you have been in your existing job for at least three months, and longer is better.
Lenders will sometimes offer incentives including reduced fees, free valuations or even cashback to help them with the property purchase. However buyers invariably pay for these incentives through higher interest rates or a less flexible mortgage.
There is a wide range of mortgages which can suit the needs of first-time buyers, although they are not always promoted as first-time deals.
Incentives such as free valuations are attractive, however it is important for first-time buyers to ensure that the mortgage's core features are good value. The most important factors to consider are the maximum loan-to-value ratio (the proportion of the property's price the bank will lend), and whether the lender charges a mortgage indemnity guarantee premium (MIG).
Let an expert adviser do all the shopping around for you.
It is very important to shop around to get the deal that is right for you.
A truly independent adviser is not tied to a single lender or to a restricted panel of mortgage companies. Instead they will scan the entire market to locate the most appropriate and cheapest deals for you.
Simply provide a few details by filling in our no obligation online enquiry form. It costs you nothing to see what your options are.