Mortgage Advice for First Time Home Buyers

By: Elizabethgrant

Buying a house is one of the most important purchases you will make, and buying a home for the first time will be an even more daunting prospect. Add to this the vast array of mortgage products available from a wide range of sources, and you are left with a high-stress, confusing decision. Getting a first time buyer mortgage deal to fit your personal circumstances on the surface may seem a complex task, but by investing some time in understanding how mortgages work and what your obligations are will stand you in good stead in the long term.

First time buyer mortgages are not what they were! As UK property prices have risen, first time home buyers have found it harder and harder to get onto the first rung of the property ladder. In fact, the market has become so 'tough' for those lenders selling first time buyer mortgages that they have had to be uncharacteristically innovative. On the other hand, the 'credit crunch' has meant that first time buyers need to be less of a risk to the lenders so we will see more guarantor mortgages, mortgages with parents or parent helping with the deposits to reduce the amount of mortgage required.

What type of mortgage can first time buyers take? Most first-time buyers will choose a repayment mortgage. Endowments are largely dying out in the wake of a mis-selling scandal - thousands of homeowners are now facing a shortfall because their endowment will not cover their mortgage.

Flexible mortgages and bad credit mortgage are definitely worth considering. There may be fewer incentives offered to first-time buyers, but they are suitable for those who can pay off large amounts of capital.

As first time buyers it is important to sit down and calculate how much you can afford to spend on your new mortgage and insurance costs before you start looking at homes. Knowing which is the best type of mortgage for your needs is never easy, do you fix it, take a flexible mortgage, take a tracker/discount or link your current account to the mortgage. Once you have an idea of this you can start looking at how much can you borrow on a new mortgage. There are two ways that mortgage lenders work this out, affordability or income multipliers. The amount you can borrow on a mortgage will depend on your income and whether you want to buy the property on your own or with someone else.

Keep in mind that a deposit can be the most important aspect of getting on the property ladder for first-time buyers; and acts as a lump sum reducing the bad credit mortgages payments that will be received by the mortgage lender. A first-time buyer mortgage deposit is the amount of money that the buyer is expected to provide towards the purchase of a property and to secure a mortgage. The balance of the value of the property is made up by a mortgage. Building a deposit for a house is not easy, and first-time buyers need to save hard to buy a house.

It has long been recognized that the huge potential of the first-time buyer to introduce new demand for their business is essential for continued growth in the mortgage-providing sector. And, as with any other market place, the business of providing mortgages has to respond to the needs and requirements of its customers. This is why the 10% deposit ceiling has now been more or less discarded, and many mortgage lenders are currently asking for deposits of as little as 3-5%, or, indeed, for no deposit at all in many case.

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