If you’re a first-time buyer, navigating the mortgage market can be daunting.
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With so many options available, it’s hard to know where to start. In this guide, we’ll talk you through the different types of first-time buyer mortgages, their advantages and disadvantages, and what you need to consider before applying.
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The two main types of mortgages available to first-time buyers are fixed-rate and variable-rate mortgages.
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Fixed-rate mortgages offer a set interest rate for a specific period, usually between two and five years, providing peace of mind that your monthly repayments will remain the same.
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Variable-rate mortgages, on the other hand, can fluctuate depending on the Bank of England base rate, meaning your monthly payments could go up or down.
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Other options available to first-time buyers include Help to Buy schemes, shared ownership, and guarantor mortgages. Help to Buy schemes have historically provided customers with a loan of up to 20% of the property’s value, interest-free for the first five years.
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Shared ownership allows you to buy a share of a property and pay rent on the remaining share. Guarantor mortgages involve a family member or friend providing a guarantee against your mortgage payments, making it easier for you to get approved.
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Before applying for a first-time buyer mortgage, there are a few things to consider.
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Firstly, it’s important to make sure you have a good credit score. This means paying your bills on time, registering on the electoral roll, and avoiding applying for credit too often.
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Secondly, you’ll need to have saved up a deposit. Most lenders require a minimum deposit of 5% of the property’s value, although the more you can save, the better your chances of getting approved for a mortgage with a lower interest rate.
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If you are looking for a mortgage as a First Time Buyer, we recommend booking a FREE call with our advisory team. You can do this quickly and simply by following the contact details below.